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, 2022

OR

☐ 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, 2022 80,576,387 shares of the Registrant’s Capital Stock, par value $1.25 per share, were outstanding.

KENNAMETAL INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

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, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three months ended September 30, 2022 and 2021	4
	Condensed Consolidated Balance Sheets (Unaudited) September 30, 2022 and June 30, 2022	5
	Condensed Consolidated Statements of Cash Flow (Unaudited) Three months ended September 30, 2022 and 2021	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	28
4.	Controls and Procedures	28
PART II - OTHER INFORMATION
1.	Legal Proceedings	29
2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
6.	Exhibits	30
Signatures		31

2

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 imposition of sanctions on Russia; uncertainties related to the effects of the ongoing COVID-19 pandemic, including the emergence of more contagious or virulent strains of the virus, its impacts on our business operations, financial results and financial position and on the industries in which we operate and the global economy generally, including as a result of travel restrictions, business and workforce disruptions associated with the pandemic; other economic recession or inflationary pressures; our ability to achieve all anticipated benefits of restructuring, simplification and modernization initiatives; our foreign operations and international markets, and the impact on our business of 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.

3

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)	2022		2021
Sales	$	494,792	$	483,509
Cost of goods sold	334,824		322,759
Gross profit	159,968		160,750
Operating expense	108,278		102,694
Restructuring and asset impairment charges (Note 5)	—		190
Amortization of intangibles	3,164		3,260
Operating income	48,526		54,606
Interest expense	6,638		6,321
Other expense (income), net	1,009		(3,459)
Income before income taxes	40,879		51,744
Provision for income taxes	11,242		13,992
Net income	29,637		37,752
Less: Net income attributable to noncontrolling interests	1,441		1,554
Net income attributable to Kennametal	$	28,196	$	36,198
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
Basic earnings per share	$	0.35	$	0.43
Diluted earnings per share	$	0.34	$	0.43
Basic weighted average shares outstanding	81,544		83,880
Diluted weighted average shares outstanding	82,165		84,751

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended September 30,
(in thousands)	2022		2021
Net income	$	29,637	$	37,752
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	3,324		1,904
Reclassification of net pension and other postretirement benefit plans loss	806		2,215
Foreign currency translation adjustments	(52,949)		(16,476)
Total other comprehensive loss, net of tax	(49,011)		(12,549)
Total comprehensive (loss) income	(19,374)		25,203
Less: comprehensive (loss) income attributable to noncontrolling interests	(324)		1,099
Comprehensive (loss) income attributable to Kennametal Shareholders	$	(19,050)	$	24,104

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

4

KENNAMETAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)	September 30, 2022		June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	64,568	$	85,586
Accounts receivable, less allowance for doubtful accounts of $9,082 and $9,422, respectively	278,716		295,346
Inventories (Note 8)	591,470		570,836
Other current assets	76,732		72,940
Total current assets	1,011,486		1,024,708
Property, plant and equipment:
Land and buildings	409,533		410,039
Machinery and equipment	1,868,682		1,904,872
Less accumulated depreciation	(1,305,685)		(1,312,870)
Property, plant and equipment, net	972,530		1,002,041
Other assets:
Goodwill (Note 16)	257,949		264,230
Other intangible assets, less accumulated amortization of $161,057 and $160,699, respectively (Note 16)	101,573		105,725
Operating lease right-of-use assets	43,823		47,206
Deferred income taxes	52,895		54,602
Other	75,952		75,012
Total other assets	532,192		546,775
Total assets	$	2,516,208	$	2,573,524
LIABILITIES
Current liabilities:
Revolving and other lines of credit and notes payable (Note 10)	$	85,239	$	21,186
Current operating lease liabilities	11,872		12,387
Accounts payable	205,940		227,887
Accrued income taxes	38,637		29,476
Accrued expenses	40,826		56,310
Other current liabilities	114,974		138,403
Total current liabilities	497,488		485,649
Long-term debt, less current maturities (Note 9)	594,566		594,364
Operating lease liabilities	32,464		35,342
Deferred income taxes	31,174		32,185
Accrued pension and postretirement benefits	107,048		112,995
Accrued income taxes	322		6,369
Other liabilities	14,801		15,373
Total liabilities	1,277,863		1,282,277
Commitments and contingencies
EQUITY (Note 14)
Kennametal Shareholders’ Equity:
Preferred stock, no par value; 5,000 shares authorized; none issued	—		—
Capital stock, $1.25 par value; 120,000 shares authorized; 81,020 and 81,337 shares issued, respectively	101,095		101,671
Additional paid-in capital	478,930		494,202
Retained earnings	1,082,575		1,070,655
Accumulated other comprehensive loss	(461,197)		(413,951)
Total Kennametal Shareholders’ Equity	1,201,403		1,252,577
Noncontrolling interests	36,942		38,670
Total equity	1,238,345		1,291,247
Total liabilities and equity	$	2,516,208	$	2,573,524

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

5

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

	Three Months Ended September 30,
(in thousands)	2022		2021
OPERATING ACTIVITIES
Net income	$	29,637	$	37,752
Adjustments to reconcile to cash from operations:
Depreciation	29,459		29,124
Amortization	3,164		3,260
Stock-based compensation expense	8,282		7,202
Restructuring and asset impairment charges (Note 5)	—		28
Deferred income taxes	64		171
Other	(2,406)		(370)
Changes in certain assets and liabilities:
Accounts receivable	5,303		19,340
Inventories	(38,499)		(34,355)
Accounts payable and accrued liabilities	(42,145)		(43,677)
Accrued income taxes	1,552		5,835
Accrued pension and postretirement benefits	(2,482)		(7,156)
Other	(2,677)		(1,351)
Net cash flow (used in) provided by operating activities	(10,748)		15,803
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(29,484)		(17,844)
Disposals of property, plant and equipment	202		393
Other	(12)		37
Net cash flow used in investing activities	(29,294)		(17,414)
FINANCING ACTIVITIES
Net increase (decrease) in notes payable	3,388		(7,997)
Net increase in revolving and other lines of credit	60,900		—
Purchase of capital stock	(19,376)		(12,909)
The effect of employee benefit and stock plans and dividend reinvestment	(4,757)		(6,317)
Cash dividends paid to Shareholders	(16,273)		(16,737)
Other	(757)		21
Net cash flow provided by (used in) financing activities	23,125		(43,939)
Effect of exchange rate changes on cash and cash equivalents	(4,101)		(1,181)
CASH AND CASH EQUIVALENTS
Net decrease in cash and cash equivalents	(21,018)		(46,731)
Cash and cash equivalents, beginning of period	85,586		154,047
Cash and cash equivalents, end of period	$	64,568	$	107,316

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

6

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, 2022 (the “2022 Annual Report”). The condensed consolidated balance sheet as of June 30, 2022 was derived from the audited balance sheet included in our 2022 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, 2022 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 2023 is to the fiscal year ending June 30, 2023. 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)	2022		2021
Cash paid during the period for:
Interest	$	5,143	$	4,966
Income taxes	9,626		7,986
Supplemental disclosure of non-cash information:
Changes in accounts payable related to purchases of property, plant and equipment	(8,708)		(800)

3.     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.

As of September 30, 2022, 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)	$	—	$	230	$	—	$	230
Total assets at fair value	$	—	$	230	$	—	$	230
Liabilities:
Derivatives (1)	$	—	$	147	$	—	$	147
Total liabilities at fair value	$	—	$	147	$	—	$	147

 

7

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of June 30, 2022, 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)	$	—	$	176	$	—	$	176
Total assets at fair value	$	—	$	176	$	—	$	176
Liabilities:
Derivatives (1)	$	—	$	574	$	—	$	574
Total liabilities at fair value	$	—	$	574	$	—	$	574

 (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.

4.    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, 2022 and June 30, 2022. The fair value of derivatives not designated as hedging instruments in the condensed consolidated balance sheets are as follows:

(in thousands)	September 30, 2022		June 30, 2022
Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	$	230	$	176
Other current liabilities - currency forward contracts	(147)		(574)
Total derivatives not designated as hedging instruments	83		(398)
Total derivatives	$	83	$	(398)

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 sheet, with the offset to other expense (income), net. (Gains) losses related to derivatives not designated as hedging instruments have been recognized as follows:

	Three Months Ended September 30,
(in thousands)	2022		2021
Other expense (income), net - currency forward contracts	$	(306)	$	140

 

NET INVESTMENT HEDGES

As of September 30, 2022 and June 30, 2022, we had certain foreign currency-denominated intercompany loans payable with total aggregate principal amounts of zero and €13.0 million, respectively, designated as net investment hedges to hedge the foreign exchange exposure of our net investment in our Euro-based subsidiaries. Gains of $1.7 million and $1.3 million were recorded as a component of foreign currency translation adjustments in other comprehensive income for the three months ended September 30, 2022 and 2021, respectively.

8

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.    RESTRUCTURING AND RELATED CHARGES

We recorded no restructuring and related charges for the three months ended September 30, 2022. For the three months ended September 30, 2021, we recorded restructuring and related charges of $1.2 million, which consisted of charges of $1.2 million in Metal Cutting and an immaterial amount in Infrastructure. Of this amount, restructuring charges were $0.2 million and restructuring-related charges were $1.1 million (included in cost of goods sold) for the three months ended September 30, 2021.

As of September 30, 2022, $4.5 million and $1.5 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, 2022, $6.0 million and $1.9 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively. The amounts are as follows:

(in thousands)	June 30, 2022		Expense		Asset Write-Down		Translation		Cash Expenditures		September 30, 2022
Severance	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007
Total	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007

6.    STOCK-BASED COMPENSATION

Stock Options

Changes in our stock options for the three months ended September 30, 2022 were as follows:

	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Aggregate Intrinsic value (in thousands)
Options outstanding, June 30, 2022	271,843	$	37.45
Exercised	—	—
Lapsed or forfeited	(31,163)	36.76
Options outstanding, September 30, 2022	240,680	$	37.54	1.9	$	—
Options vested, September 30, 2022	240,680	$	37.54	1.9	$	—
Options exercisable, September 30, 2022	240,680	$	37.54	1.9	$	—

As of September 30, 2022 and June 30, 2022, there was no unrecognized compensation cost related to options outstanding, and all options were fully vested as of September 30, 2022 and 2021.

There was no cash received from the exercise of options during the three months ended September 30, 2022 and 2021. The total intrinsic value of options exercised was zero during the three months ended September 30, 2022 and immaterial during the three months ended September 30, 2021.

9

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, 2022 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, 2022	350,955	$	33.44	1,213,896	$	33.53
Granted	189,469	27.27		693,410	27.24
Vested	—	—		(499,717)	32.10
Performance metric adjustments, net	(52,111)	27.58		—	—
Forfeited	—	—		(12,823)	32.14
Unvested, September 30, 2022	488,313	$	31.67	1,394,766	$	30.93

During the three months ended September 30, 2022 and 2021, compensation expense related to time vesting and performance vesting restricted stock units was $7.8 million and $7.0 million, respectively. Performance vesting stock units were adjusted by 52,111 units during the three months ended September 30, 2022 related to the fiscal 2022 performance year. As of September 30, 2022, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $38.7 million and is expected to be recognized over a weighted average period of 2.1 years.

7.    PENSION AND OTHER POSTRETIREMENT BENEFITS

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Service cost	$	238	$	286
Interest cost	8,040		5,659
Expected return on plan assets	(10,026)		(13,037)
Amortization of transition obligation	21		24
Amortization of prior service cost	2		3
Recognition of actuarial losses	1,105		2,970
Net periodic pension income	$	(620)	$	(4,095)

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Interest cost	$	104	$	72
Amortization of prior service credit	(68)		(69)
Recognition of actuarial loss	48		74
Net periodic other postretirement benefit cost	$	84	$	77

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 (income), net.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.    INVENTORIES

We used the last-in, first-out (LIFO) method of valuing inventories for 40 percent and 39 percent of total inventories at September 30, 2022 and June 30, 2022, 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, 2022		June 30, 2022
Finished goods	$	331,354	$	316,936
Work in process and powder blends	243,394		231,214
Raw materials	101,293		107,024
Inventories at current cost	676,041		655,174
Less: LIFO valuation	(84,571)		(84,338)
Total inventories	$	591,470	$	570,836

9.    LONG-TERM DEBT

Fixed rate debt had a fair market value of $505.3 million and $536.1 million at September 30, 2022 and June 30, 2022, respectively. The Level 2 fair value is determined based on the quoted market prices for similar debt instruments as of September 30, 2022 and June 30, 2022, respectively.

10.    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, 2022, we were in compliance with all the covenants of the Credit Agreement and we had $79.9 million of borrowings outstanding and $620.1 million of additional availability. We had $19.0 million of borrowings outstanding as of June 30, 2022.

Borrowings on other lines of credit and notes payable were $5.3 million and $2.2 million at September 30, 2022 and June 30, 2022, respectively.

11.     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, 2022, the balance of such accruals was $12.3 million, of which $7.9 million was current. At June 30, 2022, the balance was $12.5 million, of which $7.9 million was current. These accruals are generally not discounted.

11

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.

12.     INCOME TAXES

The effective income tax rates for the three months ended September 30, 2022 and 2021 were 27.5 percent and 27.0 percent, respectively. The year-over-year change is due primarily to geographical mix.

Swiss tax reform

Swiss tax reform legislation was effectively enacted during the December quarter of fiscal 2020 when the Canton of Schaffhausen approved the Federal Act on Tax Reform and AHV Financing on October 8, 2019 (Swiss tax reform). Significant changes from Swiss tax reform include the abolishment of certain favorable tax regimes and the creation of a multi-year transitional period at both the federal and cantonal levels. The transitional provisions of Swiss tax reform allow companies to utilize a combination of lower tax rates and tax basis adjustments to fair value, which are used for tax depreciation and amortization purposes resulting in deductions over the transitional period. To reflect the federal and cantonal transitional provisions, as they apply to us, we recorded a deferred tax asset of $14.5 million during the three months ended December 31, 2020. We consider the deferred tax asset from Swiss tax reform to be an estimate based on our current interpretation of the legislation, which is subject to change based on further legislative guidance, review with the Swiss federal and cantonal authorities, and modifications to the underlying valuation. We anticipate finalization of the deferred tax asset within the next three months.

13.    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.

12

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, 2022 and 2021:

	Three Months Ended September 30,
(in thousands)	2022	2021
Weighted-average shares outstanding during the period	81,544	83,880
Add: Unexercised stock options and unvested restricted stock units	621	871
Number of shares on which diluted earnings per share is calculated	82,165	84,751
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	1,249	482

14.    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, 2022 and 2021 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, 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(3)	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

	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, 2021	$	104,518	$	562,820	$	992,597	$	(330,327)	$	38,597	$	1,368,205
Net income	—		—		36,198		—		1,554		37,752
Other comprehensive loss	—		—		—		(12,094)		(455)		(12,549)
Dividend reinvestment	2		46		—		—		—		48
Capital stock issued under employee benefit and stock plans(3)	447		392		—		—		—		839
Purchase of capital stock	(440)		(12,468)		—		—		—		(12,908)
Cash dividends ($0.20 per share)	—		—		(16,740)		—		—		(16,740)
Total equity, September 30, 2021	$	104,527	$	550,790	$	1,012,055	$	(342,421)	$	39,696	$	1,364,647

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

13

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The amounts of comprehensive income attributable to Kennametal Shareholders and noncontrolling interests are disclosed in the condensed consolidated statements of comprehensive income.

15.    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, 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)

The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2021:

(in thousands)	Pension and other postretirement benefits		Currency translation adjustment		Derivatives		Total
Attributable to Kennametal:
Balance, June 30, 2021	$	(213,172)	$	(122,428)	$	5,273	$	(330,327)
Other comprehensive income (loss) before reclassifications	1,904		(16,021)		—		(14,117)
Amounts reclassified from AOCL	2,215		—		(192)		2,023
Net other comprehensive income (loss)	4,119		(16,021)		(192)		(12,094)
AOCL, September 30, 2021	$	(209,053)	$	(138,449)	$	5,081	$	(342,421)
Attributable to noncontrolling interests:
Balance, June 30, 2021	$	—	$	(3,982)	$	—	$	(3,982)
Other comprehensive loss before reclassifications	—		(455)		—		(455)
Net other comprehensive loss	—		(455)		—		(455)
AOCL, September 30, 2021	$	—	$	(4,437)	$	—	$	(4,437)

14

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Reclassifications out of AOCL for the three months ended September 30, 2022 and 2021 consisted of the following:

	Three Months Ended September 30,
(in thousands)	2022		2021		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	$	21	$	24	Other income, net
Amortization of prior service credit	(66)		(66)		Other income, net
Recognition of actuarial losses	1,153		3,044		Other income, net
Total before tax	1,108		3,002
Tax impact	(302)		(787)		Provision for income taxes
Net of tax	$	806	$	2,215

The amount of income tax allocated to each component of other comprehensive loss for the three months ended September 30, 2022 and 2021 were as follows:

			2022						2021
(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	4,479		(1,155)		3,324		2,598		(694)		1,904
Reclassification of net pension and other postretirement benefit plans loss	1,108		(302)		806		3,002		(787)		2,215
Foreign currency translation adjustments	(52,799)		(150)		(52,949)		(16,457)		(19)		(16,476)
Other comprehensive loss	$	(47,467)	$	(1,544)	$	(49,011)	$	(11,112)	$	(1,437)	$	(12,549)

15

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16.    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	$	441,891	$	633,211	$	1,075,102
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of June 30, 2022	$	264,230	$	—	$	264,230
Activity for the three months ended September 30, 2022:
Change in gross goodwill due to translation	(6,281)		—		(6,281)
Gross goodwill	435,610		633,211		1,068,821
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of September 30, 2022	$	257,949	$	—	$	257,949

The components of our other intangible assets were as follows:

	Estimated Useful Life (in years)	September 30, 2022				June 30, 2022
(in thousands)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Technology-based and other	4 to 20	$	30,907	$	(22,242)		$	31,592	$	(22,734)
Customer-related	10 to 21	178,151		(104,948)			180,263		(104,698)
Unpatented technology	10 to 30	31,564		(23,396)			31,807		(22,950)
Trademarks	5 to 20	12,283		(10,471)			12,403		(10,317)
Trademarks	Indefinite	9,725		—			10,359		—
Total		$	262,630	$	(161,057)		$	266,424	$	(160,699)

17.    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, 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.

16

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 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; 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)	2022		2021
Sales:
Metal Cutting	$	299,936	$	298,430
Infrastructure	194,856		185,079
Total sales	$	494,792	$	483,509
Operating income:
Metal Cutting	$	28,605	$	29,164
Infrastructure	20,787		26,036
Corporate	(866)		(594)
Total operating income	48,526		54,606
Interest expense	6,638		6,321
Other expense (income), net	1,009		(3,459)
Income before income taxes	$	40,879	$	51,744

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

	Three Months Ended
	September 30, 2022			September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal	Metal Cutting	Infrastructure	Total Kennametal
Americas	45%	62%	51%	40%	58%	47%
EMEA	33	16	27	38	19	31
Asia Pacific	22	22	22	22	23	22

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

	Three Months Ended September 30, 2022
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	32%	46%
Transportation	27	—	16
Aerospace	10	—	6
Energy	7	32	17
Earthworks	—	36	15

17

KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	Three Months Ended September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	35%	48%
Transportation	28	—	17
Aerospace	9	—	5
Energy	7	29	16
Earthworks	—	36	14

18

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, 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 offerings span 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 our 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. Our 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.

Throughout 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, 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 $494.8 million for the quarter ended September 30, 2022 increased 2 percent year-over-year, reflecting 9 percent organic sales growth, partially offset by an unfavorable foreign currency effect of 7 percent.

Operating income was $48.5 million compared to $54.6 million in the prior year quarter. The year-over-year decrease of $6.1 million was due primarily to favorable pricing, higher sales volumes and favorable product mix which were more than offset by higher raw material costs of approximately $17 million, higher costs, foreign currency exchange headwinds of approximately $6 million and approximately $5 million from temporary supply chain disruptions. Operating margin was 9.8 percent compared to 11.3 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 9.5 percent and 10.7 percent, respectively, for the quarter ended September 30, 2022.

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. Since then, many jurisdictions have eased stay-at-home, social distancing, and various other restrictions as the administration and acceptance of vaccines has increased. Alternatively, strict restrictions, including lockdowns, and elevated infection rates continue to exist in various regions. The restrictions 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 has 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 2023.

In addition, our business has 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.

For the three months ended September 30, 2022, the Company repurchased $19 million of Kennametal common stock under its $200 million three-year program. Inception-to-date the Company has repurchased $105 million of Kennametal common stock.

The Company paid $16 million in cash dividends to Kennametal shareholders during the quarter. The Company has a long history of consistently paying dividends to shareholders since its listing on the New York Stock Exchange in 1967.

19

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

Current quarter earnings per diluted share (EPS) was $0.34. EPS of $0.43 in the prior year quarter was unfavorably affected by restructuring and related charges of $0.01 per share.

Net cash flow used in operating activities was $10.7 million during the three months ended September 30, 2022 compared to net cash flow provided by operating activities of $15.8 million during the prior year quarter. Capital expenditures were $29.5 million and $17.8 million during the three months ended September 30, 2022 and 2021, respectively.

RESULTS OF CONTINUING OPERATIONS

SALES

Sales for the three months ended September 30, 2022 were $494.8 million, an increase of $11.3 million, or 2 percent, from $483.5 million in the prior year quarter. The increase in sales was driven by organic growth of 9 percent, partially offset by an unfavorable foreign currency effect of 7 percent.

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

	Three Months Ended September 30, 2022
(in percentages)	As Reported	Constant Currency
End market sales growth (decline):
Aerospace	18%	25%
Energy	11	15
Earthworks	6	11
General engineering	(1)	5
Transportation	(3)	6
Regional sales growth (decline):
Americas	12%	13%
Asia Pacific	—	7
Europe, the Middle East and Africa (EMEA)	(11)	4

GROSS PROFIT

Gross profit for the three months ended September 30, 2022 was $160.0 million, a decrease of $0.8 million from $160.8 million in the prior year quarter. The decrease was due primarily to favorable pricing, higher sales volumes and favorable product mix which were more than offset by higher raw material costs of approximately $17 million, higher costs, foreign currency exchange headwinds of approximately $12 million and approximately $5 million from temporary supply chain disruptions. Operating margin was 9.8 percent compared to 11.3 percent in the prior year quarter. Gross profit margin for the three months ended September 30, 2022 was 32.3 percent, as compared to 33.2 percent in the prior year quarter.

OPERATING EXPENSE

Operating expense for the three months ended September 30, 2022 was $108.3 million compared to $102.7 million for the three months ended September 30, 2021. The year-over-year change is due primarily to an increase in travel and higher salaries.

Research and development expenses included in operating expense totaled $10.6 million and $10.2 million for the three months ended September 30, 2022 and 2021, respectively.

INTEREST EXPENSE

Interest expense for the three months ended September 30, 2022 increased to $6.6 million compared to $6.3 million for the three months ended September 30, 2021.

OTHER EXPENSE/INCOME, NET

Other expense for the three months ended September 30, 2022 was $1.0 million compared to other income of $3.5 million during the three months ended September 30, 2021. The year-over-year change is due primarily to lower net periodic pension income in the current year.

20

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

PROVISION FOR INCOME TAXES

The effective income tax rates for the three months ended September 30, 2022 and 2021 were 27.5 percent and 27.0 percent, respectively. The year-over-year change is due primarily to geographical mix.

BUSINESS SEGMENT REVIEW

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.

Our sales and operating income by segment are as follows:

	Three Months Ended September 30,
(in thousands)	2022		2021
Sales:
Metal Cutting	$	299,936	$	298,430
Infrastructure	194,856		185,079
Total sales	$	494,792	$	483,509
Operating income:
Metal Cutting	$	28,605	$	29,164
Infrastructure	20,787		26,036
Corporate	(866)		(594)
Total operating income	48,526		54,606
Interest expense	6,638		6,321
Other expense (income), net	1,009		(3,459)
Income before income taxes	$	40,879	$	51,744

METAL CUTTING

	Three Months Ended September 30,
(in thousands, except operating margin)	2022			2021
Sales	$	299,936		$	298,430
Operating income	28,605			29,164
Operating margin	9.5		%	9.8		%

	Three Months Ended September 30, 2022
(in percentages)
Organic sales growth	9%
Foreign currency exchange effect(1)	(8)
Sales growth	1%

21

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

	Three Months Ended September 30, 2022
(in percentages)	As Reported	Constant Currency
End market sales growth (decline):
Aerospace	18%	25%
General engineering	—	8
Transportation	(3)	6
Energy	(3)	4
Regional sales growth (decline):
Americas	12%	13%
Asia Pacific	(1)	6
EMEA	(11)	5

For the three months ended September 30, 2022, Metal Cutting sales increased 1 percent from the prior year quarter. The increase in sales was driven by organic growth of 9 percent, partially offset by an unfavorable foreign currency effect of 8 percent. Aerospace end market sales increased in all regions as global travel levels and airplane manufacturing continue to recover, despite ongoing supply chain issues on certain components. Energy sales increased in the Americas and Asia Pacific, excluding the impact from foreign currency exchange, as economic activity improves and countries develop alternative supply chains in response to the Russia sanctions, partially offset by a decrease in EMEA. Sales in our general engineering end market increased in all regions, excluding the impact from foreign currency exchange, as manufacturing activity continues to recover from the COVID-19 pandemic and strong underlying demand continues, though inflation and supply chain challenges mitigated growth. Transportation end market sales increased in all regions, excluding the impact from foreign currency exchange, due to improved automotive manufacturing levels and continued strong underlying demand. On a regional basis, the sales increase in the Americas was driven by increases in all end markets. The sales increase in EMEA, excluding the impact from foreign currency exchange, was driven by increases in the aerospace, general engineering, and transportation end markets, partially offset by a decrease in the energy end market. The sales increase in Asia Pacific, excluding the impact from foreign currency exchange, was driven by increases in all end markets.

For the three months ended September 30, 2022, Metal Cutting operating income was $28.6 million compared to $29.2 million in the prior year quarter. The year-over-year change was due primarily to favorable pricing, higher sales volumes and favorable product mix which were more than offset by higher raw material costs of approximately $5 million, foreign currency exchange headwinds of approximately $5 million, higher costs and temporary supply chain disruptions.

INFRASTRUCTURE

	Three Months Ended September 30,
(in thousands)	2022			2021
Sales	$	194,856		$	185,079
Operating income	20,787			26,036
Operating margin	10.7		%	14.1		%

	Three Months Ended September 30, 2022
(in percentages)
Organic sales growth	10%
Foreign currency exchange effect(1)	(5)
Sales growth	5%

22

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

	Three Months Ended September 30, 2022
(in percentages)	As Reported	Constant Currency
End market sales growth (decline):
Energy	17%	20%
Earthworks	6	11
General engineering	(5)	—
Regional sales growth (decline):
Americas	13%	13%
Asia Pacific	3	8
EMEA	(14)	—

For the three months ended September 30, 2022, Infrastructure sales increased by 5 percent from the prior year quarter. The increase in sales was driven by organic growth of 10 percent, partially offset by an unfavorable foreign currency effect of 5 percent. Energy end market sales increased as U.S. oil and gas contributed to the year-over-year and as land rig counts continue to increase. Earthworks end market sales increased primarily due to growth in mining and construction. General engineering end market sales were flat year over year, excluding the impact from foreign currency exchange, driven by decreases in EMEA and the Americas, offset by an increase in Asia Pacific. On a regional basis, the sales increase in the Americas was driven by increases in the energy and earthworks end markets, partially offset by a decline in general engineering due to the loss of a customer who elected to insource production. The sales in EMEA were flat year over year, excluding the impact from foreign currency exchange, due to an increase in the earthworks end market offset with a decrease in general engineering due to order timing. The sales increases in Asia Pacific were driven by increases in the earthworks and general engineering end markets, partially offset by a decline in the energy end market.

For the three months ended September 30, 2022, Infrastructure operating income was $20.8 million compared to $26.0 million in the prior year quarter. The year-over-year change was due primarily to favorable pricing, higher sales volumes and favorable product mix which were more than offset by higher raw material costs of approximately $13 million, higher costs, temporary supply chain disruptions and foreign currency exchange headwinds of approximately $1 million.

CORPORATE

	Three Months Ended September 30,
(in thousands)	2022		2021
Corporate expense	$	(866)	$	(594)

For the three months ended September 30, 2022, Corporate expense increased by $0.3 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, 2022, cash flow used in operating activities was $10.7 million.

23

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

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, 2022, we were in compliance with all the covenants of the Credit Agreement and we had $79.9 million of borrowings outstanding and $620.1 million of additional availability. We had $19.0 million of borrowings outstanding as of June 30, 2022.

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.

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. While the outcome of the litigation is still pending, the tax authority served notice in the September quarter of fiscal 2020 requiring payment in the amount of €36 million. Accordingly, we requested and were granted a stay and are not currently required to make a payment in connection with this assessment. We continue to believe that the assessment is baseless and accordingly, no income tax liability has been recorded in connection with this assessment in any period. However, if the Italian tax authority were to be successful in litigation, settlement of the amount alleged by the Italian tax authority would result in an increase to income tax expense by as much as €36.7 million, or $35.8 million, including penalties and interest of €22.0 million, or $21.4 million.

At September 30, 2022, cash and cash equivalents were $64.6 million, Total Kennametal Shareholders' equity was $1,201.4 million and total debt was $679.8 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, 2022.

Cash Flow Used in/Provided by Operating Activities

During the three months ended September 30, 2022, cash flow used in operating activities was $10.7 million, compared to cash flow provided by operating activities of $15.8 million for the prior year period. Cash flow used in operating activities for the current year period consisted 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.

During the three months ended September 30, 2021, cash flow provided by operating activities was $15.8 million and consisted of net income and non-cash items amounting to an inflow of $77.2 million and changes in certain assets and liabilities netting to an outflow of $61.4 million. Contributing to the changes in certain assets and liabilities were an increase in accrued income taxes of $5.8 million and a decrease in accounts receivable of $19.3 million. Offsetting these cash inflows were a decrease in accrued pension and postretirement benefits of $7.2 million, an increase in inventories of $34.4 million, a decrease in accounts payable and accrued liabilities of $43.7 million and an increase in other of $1.4 million.

24

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 $29.3 million for the three months ended September 30, 2022, compared to $17.4 million for the prior year period. During the current year period, cash flow used in investing activities primarily included capital expenditures, net of $29.3 million, which consisted primarily of equipment upgrades, partially offset by disposals of property, plant, and equipment of $0.2 million.

Cash flow used in investing activities was $17.4 million for the three months ended September 30, 2021 and primarily included capital expenditures, net of $17.5 million, which consisted primarily of expenditures related to our simplification/modernization initiatives and equipment upgrades.

Cash Flow Provided by/Used in Financing Activities

Cash flow provided by financing activities was $23.1 million for the three months ended September 30, 2022 compared to cash flow used in financing activities of $43.9 million in the prior year period. During the current year period, cash flow provided by financing activities 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.

Cash flow used in financing activities was $43.9 million for the three months ended September 30, 2021 and included $16.7 million of cash dividends paid to Kennametal Shareholders, $12.9 million in common shares repurchased, and a $8.0 million decrease in notes payable.

FINANCIAL CONDITION

Working capital was $514.0 million at September 30, 2022, a decrease of $25.1 million from $539.1 million at June 30, 2022. The decrease in working capital was primarily driven by an increase in borrowings under the Credit Agreement of $64.1 million, a decrease in cash and cash equivalents of $21.0 million and a decrease in accounts receivable of $16.6 million, partially offset by an increase in inventories of $20.6 million, a decrease in other current liabilities of $23.4 million, a decrease in accounts payable of $21.9 million, and a decrease in accrued expenses of $15.5 million. Currency exchange rate effects decreased working capital by a total of approximately $25.7 million, the impact of which is included in the aforementioned changes.

Property, plant and equipment, net decreased $29.5 million from $1,002.0 million at June 30, 2022 to $972.5 million at September 30, 2022, primarily due to depreciation expense of $29.5 million and unfavorable currency effects of $20.6 million, partially offset by net capital additions of $29.5 million.

At September 30, 2022, other assets were $532.2 million, a decrease of $14.6 million from $546.8 million at June 30, 2022. The decrease was primarily due to amortization of intangibles of $3.2 million, a decrease in goodwill of $6.3 million due to currency exchange effects, and a decrease in the operating lease right-of-use asset of $3.4 million, partially offset by an increase in other assets of $0.9 million.

Kennametal Shareholders' equity was $1,201.4 million at September 30, 2022, a decrease of $51.2 million from $1,252.6 million at June 30, 2022. The decrease was primarily due to other comprehensive loss of $49.0 million, the repurchase of capital stock of $19.4 million primarily under the share repurchase program that was initiated during fiscal 2022 and cash dividends paid to Kennametal Shareholders of $16.3 million, partially offset by net income attributable to Kennametal of $29.6 million.

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

There have been no changes to our critical accounting policies since June 30, 2022.

25

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 Organic sales growth is a non-GAAP financial measure of sales growth (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 on a consistent basis. Also, we report organic sales growth at the consolidated and segment levels.

Constant currency end market sales growth Constant currency end market sales growth 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 at the consolidated and segment levels.

Constant currency regional sales growth Constant currency regional sales growth 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 at the consolidated and segment levels.

Reconciliations of organic sales growth to sales growth are as follows:

Three Months Ended September 30, 2022	Metal Cutting	Infrastructure	Total
Organic sales growth	9%	10%	9%
Foreign currency exchange effect(1)	(8)	(5)	(7)
Sales growth	1%	5%	2%

26

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

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

Metal Cutting
Three Months Ended September 30, 2022	General engineering	Transportation	Aerospace	Energy
Constant currency end market sales growth	8%	6%	25%	4%
Foreign currency exchange effect(1)	(8)	(9)	(7)	(7)
End market sales growth (decline)(2)	—%	(3)%	18%	(3)%

Infrastructure
Three Months Ended September 30, 2022	Energy	Earthworks	General engineering
Constant currency end market sales growth	20%	11%	—%
Foreign currency exchange effect(1)	(3)	(5)	(5)
End market sales growth (decline)(2)	17%	6%	(5)%

Total
Three Months Ended September 30, 2022	General engineering	Transportation	Aerospace	Energy	Earthworks
Constant currency end market sales growth	5%	6%	25%	15%	11%
Foreign currency exchange effect(1)	(6)	(9)	(7)	(4)	(5)
End market sales(decline) growth(2)	(1)%	(3)%	18%	11%	6%

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

	Three Months Ended September 30, 2022
	Americas	EMEA	Asia Pacific
Metal Cutting
Constant currency regional sales growth	13%	5%	6%
Foreign currency exchange effect(1)	(1)	(16)	(7)
Regional sales growth (decline)(3)	12%	(11)%	(1)%
Infrastructure
Constant currency regional sales growth	13%	—%	8%
Foreign currency exchange effect(1)	—	(14)	(5)
Regional sales growth (decline)(3)	13%	(14)%	3%
Total
Constant currency regional sales growth	13%	4%	7%
Foreign currency exchange effect(1)	(1)	(15)	(7)
Regional sales growth (decline)(3)	12%	(11)%	—%

(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.

27

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk exposures since June 30, 2022.

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, 2022 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.

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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 AND USE OF PROCEEDS

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, 2022	645	$	23.14	—	$	114,700,000
August 1 through August 31, 2022	382,993	26.56		250,000	108,200,000
September 1 through September 30, 2022	575,806	22.30		573,645	95,400,000
Total	959,444	$	24.00	823,645

(1)During the current period, 1,795 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 134,004 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.    

29

ITEM 6.    EXHIBITS

31	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.
32	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, 2022 and 2021, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2022 and 2021, (iii) the Condensed Consolidated Balance Sheets at September 30, 2022 and June 30, 2022, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2022 and 2021 and (v) Notes to Condensed Consolidated Financial Statements for the three months ended September 30, 2022 and 2021.

30

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, 2022	By:	/s/ John W. Witt
			John W. Witt Vice President Finance and Corporate Controller

31

EX-31.1

Exhibit 31.1

I, Christopher Rossi, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Kennametal Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions)

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2022	/s/ Christopher Rossi
		Christopher Rossi President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Patrick S. Watson, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Kennametal Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions)

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2022	/s/ Patrick S. Watson
		Patrick S. Watson Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kennametal Inc. (the “Corporation”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Corporation certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Corporation.

/s/ Christopher Rossi

Christopher Rossi

President and Chief Executive Officer

November 3, 2022

/s/ Patrick S. Watson

Patrick S. Watson

Vice President and Chief Financial Officer

November 3, 2022

*This certification is made solely for purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

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	Sep. 30, 2022	Oct. 31, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-5318
Entity Registrant Name	KENNAMETAL INC.
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	25-0900168
Entity Address, Address Line One	525 William Penn Place
Entity Address, Address Line Two	Suite 3300
Entity Address, City or Town	Pittsburgh,
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15219
City Area Code	412
Local Phone Number	248-8000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		80,576,387
Entity Central Index Key	0000055242
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
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Capital Stock, par value $1.25 per share | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	Capital Stock, par value $1.25 per share
Trading Symbol	KMT
Security Exchange Name	NYSE
Preferred Stock Purchase Rights | New York Stock Exchange
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Basis of Presentation	3 Months Ended
	Sep. 30, 2022
Accounting Policies [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATIONThe 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, 2022 (the “2022 Annual Report”). The condensed consolidated balance sheet as of June 30, 2022 was derived from the audited balance sheet included in our 2022 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, 2022 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 2023 is to the fiscal year ending June 30, 2023. 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.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Sales	$ 494,792	$ 483,509
Cost of goods sold	334,824	322,759
Gross profit	159,968	160,750
Operating expense	108,278	102,694
Restructuring and asset impairment charges (Note 5)	0	190
Amortization of intangibles	3,164	3,260
Operating income	48,526	54,606
Interest expense	6,638	6,321
Other expense (income), net	1,009	(3,459)
Income before income taxes	40,879	51,744
Provision for income taxes	11,242	13,992
Net income	29,637	37,752
Less: Net income attributable to noncontrolling interests	1,441	1,554
Net income attributable to Kennametal	$ 28,196	$ 36,198
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
Basic earnings per share	$ 0.35	$ 0.43
Diluted earnings per share	0.34	0.43
Dividends per share	$ 0.20	$ 0.20
Basic weighted average shares outstanding	81,544	83,880
Diluted weighted average shares outstanding	82,165	84,751
Noncontrolling Interest [Member]
Net income	$ 1,441	$ 1,554

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net income	$ 29,637	$ 37,752
Other comprehensive income (loss), net of tax [Abstract]
Reclassification of unrealized gain on derivatives designated and qualified as cash flow hedges	(192)	(192)
Unrecognized net pension and other postretirement benefit gain	3,324	1,904
Reclassification of net pension and other postretirement benefit loss	806	2,215
Foreign currency translation adjustments	(52,949)	(16,476)
Total other comprehensive loss, net of tax	(49,011)	(12,549)
Total comprehensive (loss) income	(19,374)	25,203
Less: comprehensive (loss) income attributable to noncontrolling interests	(324)	1,099
Comprehensive (loss) income attributable to Kennametal Shareholders	(19,050)	24,104
Accumulated Other Comprehensive (Loss) Income [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	63	63
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	$ 63	$ 63

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2021
Current assets:
Cash and cash equivalents	$ 64,568	$ 85,586	$ 107,316	$ 154,047
Accounts receivable, less allowance for doubtful accounts of $9,082 and $9,422, respectively	278,716	295,346
Inventories (Note 8)	591,470	570,836
Other current assets	76,732	72,940
Total current assets	1,011,486	1,024,708
Property, plant and equipment:
Land and buildings	409,533	410,039
Machinery and equipment	1,868,682	1,904,872
Less accumulated depreciation	(1,305,685)	(1,312,870)
Property, plant and equipment, net	972,530	1,002,041
Other assets:
Goodwill (Note 16)	257,949	264,230
Other intangible assets, less accumulated amortization of $161,057 and $160,699, respectively (Note 16)	101,573	105,725
Operating lease right-of-use assets	43,823	47,206
Deferred income taxes	52,895	54,602
Other	75,952	75,012
Total other assets	532,192	546,775
Total assets	2,516,208	2,573,524
Current liabilities:
Revolving and other lines of credit and notes payable (Note 10)	85,239	21,186
Current operating lease liabilities	11,872	12,387
Accounts payable	205,940	227,887
Accrued income taxes	38,637	29,476
Accrued expenses	40,826	56,310
Other current liabilities	114,974	138,403
Total current liabilities	497,488	485,649
Long-term debt, less current maturities (Note 9)	594,566	594,364
Operating lease liabilities	32,464	35,342
Deferred income taxes	31,174	32,185
Accrued pension and postretirement benefits	107,048	112,995
Accrued income taxes	322	6,369
Other liabilities	14,801	15,373
Total liabilities	1,277,863	1,282,277
Commitments and contingencies
Kennametal Shareholders' Equity
Preferred stock, no par value; 5,000 shares authorized; none issued	0	0
Capital stock, $1.25 par value; 120,000 shares authorized; 81,020 and 81,337 shares issued, respectively	101,095	101,671
Additional paid-in capital	478,930	494,202
Retained earnings	1,082,575	1,070,655
Accumulated other comprehensive loss	(461,197)	(413,951)	(342,421)	(330,327)
Total Kennametal Shareholders' Equity	1,201,403	1,252,577
Noncontrolling interests	36,942	38,670
Total equity	1,238,345	1,291,247	$ 1,364,647	$ 1,368,205
Total liabilities and equity	$ 2,516,208	$ 2,573,524
Common Stock, Par or Stated Value Per Share	$ 1.25	$ 1.25
Preferred Stock, No Par Value	$ 0	$ 0
Preferred Stock, Shares Authorized	5,000	5,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 9,082	$ 9,422
Accumulated amortization on other intangible assets	$ 161,057	$ 160,699
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	5,000	5,000
Capital stock, par value	$ 1.25	$ 1.25
Capital stock, shares authorized	120,000	120,000
Capital stock, shares issued	81,020	81,337
Preferred Stock, Shares Issued	0	0

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
OPERATING ACTIVITIES
Net income (loss)	$ 29,637	$ 37,752
Adjustments to reconcile to cash from operations:
Depreciation	29,459	29,124
Amortization	3,164	3,260
Stock-based compensation expense	8,282	7,202
Restructuring and asset impairment charges (Note 5)	0	28
Deferred income taxes	64	171
Other	(2,406)	(370)
Changes in certain assets and liabilities:
Accounts receivable	5,303	19,340
Inventories	(38,499)	(34,355)
Accounts payable and accrued liabilities	(42,145)	(43,677)
Accrued income taxes	1,552	5,835
Accrued pension and postretirement benefits	(2,482)	(7,156)
Other	(2,677)	(1,351)
Net cash flow (used in) provided by operating activities	(10,748)	15,803
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(29,484)	(17,844)
Disposals of property, plant and equipment	202	393
Other	(12)	37
Net cash flow used in investing activities	(29,294)	(17,414)
FINANCING ACTIVITIES
Net increase (decrease) in notes payable	3,388	(7,997)
Net increase revolving and other lines of credit	60,900	0
Purchase of capital stock	(19,376)	(12,909)
The effect of employee benefit and stock plans and dividend reinvestment	(4,757)	(6,317)
Cash dividends paid to Shareholders	(16,273)	(16,737)
Other	(757)	21
Net cash flow provided by (used in) financing activities	23,125	(43,939)
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Continuing Operations	(4,101)	(1,181)
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	$ (21,018)	$ (46,731)

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Supplemental Cash Flow Disclosures

3 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW DISCLOSURES

SUPPLEMENTAL CASH FLOW DISCLOSURES

	Three Months Ended September 30,
(in thousands)	2022		2021
Cash paid during the period for:
Interest	$	5,143	$	4,966
Income taxes	9,626		7,986
Supplemental disclosure of non-cash information:
Changes in accounts payable related to purchases of property, plant and equipment	(8,708)		(800)

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Supplemental Cash Flow

3 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Disclosures

	Three Months Ended September 30,
(in thousands)	2022		2021
Cash paid during the period for:
Interest	$	5,143	$	4,966
Income taxes	9,626		7,986
Supplemental disclosure of non-cash information:
Changes in accounts payable related to purchases of property, plant and equipment	(8,708)		(800)

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Supplemental Cash Flow - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Supplemental Cash Flow Elements [Abstract]
Interest	$ 5,143	$ 4,966
Income taxes	9,626	7,986
Change in accounts payable related to purchases of property, plant, and equipment	$ (8,708)	$ (800)

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Fair Value Measurements

3 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

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.

As of September 30, 2022, 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)	$	—	$	230	$	—	$	230
Total assets at fair value	$	—	$	230	$	—	$	230
Liabilities:
Derivatives (1)	$	—	$	147	$	—	$	147
Total liabilities at fair value	$	—	$	147	$	—	$	147

 

As of June 30, 2022, 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)	$	—	$	176	$	—	$	176
Total assets at fair value	$	—	$	176	$	—	$	176
Liabilities:
Derivatives (1)	$	—	$	574	$	—	$	574
Total liabilities at fair value	$	—	$	574	$	—	$	574

 (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.

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Derivative Instruments and Hedging Activities

3 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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, 2022 and June 30, 2022. The fair value of derivatives not designated as hedging instruments in the condensed consolidated balance sheets are as follows:

(in thousands)	September 30, 2022		June 30, 2022
Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	$	230	$	176
Other current liabilities - currency forward contracts	(147)		(574)
Total derivatives not designated as hedging instruments	83		(398)
Total derivatives	$	83	$	(398)

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 sheet, with the offset to other expense (income), net. (Gains) losses related to derivatives not designated as hedging instruments have been recognized as follows:

	Three Months Ended September 30,
(in thousands)	2022		2021
Other expense (income), net - currency forward contracts	$	(306)	$	140

 

NET INVESTMENT HEDGES

As of September 30, 2022 and June 30, 2022, we had certain foreign currency-denominated intercompany loans payable with total aggregate principal amounts of zero and €13.0 million, respectively, designated as net investment hedges to hedge the foreign exchange exposure of our net investment in our Euro-based subsidiaries. Gains of $1.7 million and $1.3 million were recorded as a component of foreign currency translation adjustments in other comprehensive income for the three months ended September 30, 2022 and 2021, respectively.

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Restructuring and Related Charges

3 Months Ended

Sep. 30, 2022

Restructuring Charges [Abstract]

RESTRUCTURING AND RELATED CHARGES

RESTRUCTURING AND RELATED CHARGES

We recorded no restructuring and related charges for the three months ended September 30, 2022. For the three months ended September 30, 2021, we recorded restructuring and related charges of $1.2 million, which consisted of charges of $1.2 million in Metal Cutting and an immaterial amount in Infrastructure. Of this amount, restructuring charges were $0.2 million and restructuring-related charges were $1.1 million (included in cost of goods sold) for the three months ended September 30, 2021.

As of September 30, 2022, $4.5 million and $1.5 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, 2022, $6.0 million and $1.9 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively. The amounts are as follows:

(in thousands)	June 30, 2022		Expense		Asset Write-Down		Translation		Cash Expenditures		September 30, 2022
Severance	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007
Total	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007

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Stock-Based Compensation

3 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock Options

Changes in our stock options for the three months ended September 30, 2022 were as follows:

	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Aggregate Intrinsic value (in thousands)
Options outstanding, June 30, 2022	271,843	$	37.45
Exercised	—	—
Lapsed or forfeited	(31,163)	36.76
Options outstanding, September 30, 2022	240,680	$	37.54	1.9	$	—
Options vested, September 30, 2022	240,680	$	37.54	1.9	$	—
Options exercisable, September 30, 2022	240,680	$	37.54	1.9	$	—

As of September 30, 2022 and June 30, 2022, there was no unrecognized compensation cost related to options outstanding, and all options were fully vested as of September 30, 2022 and 2021.

There was no cash received from the exercise of options during the three months ended September 30, 2022 and 2021. The total intrinsic value of options exercised was zero during the three months ended September 30, 2022 and immaterial during the three months ended September 30, 2021.

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, 2022 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, 2022	350,955	$	33.44	1,213,896	$	33.53
Granted	189,469	27.27		693,410	27.24
Vested	—	—		(499,717)	32.10
Performance metric adjustments, net	(52,111)	27.58		—	—
Forfeited	—	—		(12,823)	32.14
Unvested, September 30, 2022	488,313	$	31.67	1,394,766	$	30.93

During the three months ended September 30, 2022 and 2021, compensation expense related to time vesting and performance vesting restricted stock units was $7.8 million and $7.0 million, respectively. Performance vesting stock units were adjusted by 52,111 units during the three months ended September 30, 2022 related to the fiscal 2022 performance year. As of September 30, 2022, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $38.7 million and is expected to be recognized over a weighted average period of 2.1 years.

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Pension and Other Postretirement Benefits

3 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFITS

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Service cost	$	238	$	286
Interest cost	8,040		5,659
Expected return on plan assets	(10,026)		(13,037)
Amortization of transition obligation	21		24
Amortization of prior service cost	2		3
Recognition of actuarial losses	1,105		2,970
Net periodic pension income	$	(620)	$	(4,095)

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Interest cost	$	104	$	72
Amortization of prior service credit	(68)		(69)
Recognition of actuarial loss	48		74
Net periodic other postretirement benefit cost	$	84	$	77

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 (income), net.

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Inventories

3 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

We used the last-in, first-out (LIFO) method of valuing inventories for 40 percent and 39 percent of total inventories at September 30, 2022 and June 30, 2022, 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, 2022		June 30, 2022
Finished goods	$	331,354	$	316,936
Work in process and powder blends	243,394		231,214
Raw materials	101,293		107,024
Inventories at current cost	676,041		655,174
Less: LIFO valuation	(84,571)		(84,338)
Total inventories	$	591,470	$	570,836

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Long-Term Debt

3 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBTFixed rate debt had a fair market value of $505.3 million and $536.1 million at September 30, 2022 and June 30, 2022, respectively. The Level 2 fair value is determined based on the quoted market prices for similar debt instruments as of September 30, 2022 and June 30, 2022, respectively.

Short-term Debt

10.    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, 2022, we were in compliance with all the covenants of the Credit Agreement and we had $79.9 million of borrowings outstanding and $620.1 million of additional availability. We had $19.0 million of borrowings outstanding as of June 30, 2022.

Borrowings on other lines of credit and notes payable were $5.3 million and $2.2 million at September 30, 2022 and June 30, 2022, respectively.

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Environmental Matters

3 Months Ended

Sep. 30, 2022

Environmental Remediation Obligations [Abstract]

ENVIRONMENTAL MATTERS

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, 2022, the balance of such accruals was $12.3 million, of which $7.9 million was current. At June 30, 2022, the balance was $12.5 million, of which $7.9 million was current. These accruals are generally not discounted.

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.

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Income Taxes

3 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective income tax rates for the three months ended September 30, 2022 and 2021 were 27.5 percent and 27.0 percent, respectively. The year-over-year change is due primarily to geographical mix.

Swiss tax reform

Swiss tax reform legislation was effectively enacted during the December quarter of fiscal 2020 when the Canton of Schaffhausen approved the Federal Act on Tax Reform and AHV Financing on October 8, 2019 (Swiss tax reform). Significant changes from Swiss tax reform include the abolishment of certain favorable tax regimes and the creation of a multi-year transitional period at both the federal and cantonal levels. The transitional provisions of Swiss tax reform allow companies to utilize a combination of lower tax rates and tax basis adjustments to fair value, which are used for tax depreciation and amortization purposes resulting in deductions over the transitional period. To reflect the federal and cantonal transitional provisions, as they apply to us, we recorded a deferred tax asset of $14.5 million during the three months ended December 31, 2020. We consider the deferred tax asset from Swiss tax reform to be an estimate based on our current interpretation of the legislation, which is subject to change based on further legislative guidance, review with the Swiss federal and cantonal authorities, and modifications to the underlying valuation. We anticipate finalization of the deferred tax asset within the next three months.

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Earnings Per Share

3 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHAREBasic 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.

The following table provides the computation of diluted shares outstanding for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
(in thousands)	2022	2021
Weighted-average shares outstanding during the period	81,544	83,880
Add: Unexercised stock options and unvested restricted stock units	621	871
Number of shares on which diluted earnings per share is calculated	82,165	84,751
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	1,249	482

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Equity

3 Months Ended

Sep. 30, 2022

Equity [Abstract]

EQUITY

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, 2022 and 2021 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, 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(3)	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

	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, 2021	$	104,518	$	562,820	$	992,597	$	(330,327)	$	38,597	$	1,368,205
Net income	—		—		36,198		—		1,554		37,752
Other comprehensive loss	—		—		—		(12,094)		(455)		(12,549)
Dividend reinvestment	2		46		—		—		—		48
Capital stock issued under employee benefit and stock plans(3)	447		392		—		—		—		839
Purchase of capital stock	(440)		(12,468)		—		—		—		(12,908)
Cash dividends ($0.20 per share)	—		—		(16,740)		—		—		(16,740)
Total equity, September 30, 2021	$	104,527	$	550,790	$	1,012,055	$	(342,421)	$	39,696	$	1,364,647

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

The amounts of comprehensive income attributable to Kennametal Shareholders and noncontrolling interests are disclosed in the condensed consolidated statements of comprehensive income.

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Accumulated Other Comprehensive Loss

3 Months Ended

Sep. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

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, 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)

The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2021:

(in thousands)	Pension and other postretirement benefits		Currency translation adjustment		Derivatives		Total
Attributable to Kennametal:
Balance, June 30, 2021	$	(213,172)	$	(122,428)	$	5,273	$	(330,327)
Other comprehensive income (loss) before reclassifications	1,904		(16,021)		—		(14,117)
Amounts reclassified from AOCL	2,215		—		(192)		2,023
Net other comprehensive income (loss)	4,119		(16,021)		(192)		(12,094)
AOCL, September 30, 2021	$	(209,053)	$	(138,449)	$	5,081	$	(342,421)
Attributable to noncontrolling interests:
Balance, June 30, 2021	$	—	$	(3,982)	$	—	$	(3,982)
Other comprehensive loss before reclassifications	—		(455)		—		(455)
Net other comprehensive loss	—		(455)		—		(455)
AOCL, September 30, 2021	$	—	$	(4,437)	$	—	$	(4,437)

Reclassifications out of AOCL for the three months ended September 30, 2022 and 2021 consisted of the following:

	Three Months Ended September 30,
(in thousands)	2022		2021		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	$	21	$	24	Other income, net
Amortization of prior service credit	(66)		(66)		Other income, net
Recognition of actuarial losses	1,153		3,044		Other income, net
Total before tax	1,108		3,002
Tax impact	(302)		(787)		Provision for income taxes
Net of tax	$	806	$	2,215

The amount of income tax allocated to each component of other comprehensive loss for the three months ended September 30, 2022 and 2021 were as follows:

			2022						2021
(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	4,479		(1,155)		3,324		2,598		(694)		1,904
Reclassification of net pension and other postretirement benefit plans loss	1,108		(302)		806		3,002		(787)		2,215
Foreign currency translation adjustments	(52,799)		(150)		(52,949)		(16,457)		(19)		(16,476)
Other comprehensive loss	$	(47,467)	$	(1,544)	$	(49,011)	$	(11,112)	$	(1,437)	$	(12,549)

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Goodwill and Other Intangible Assets

3 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

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	$	441,891	$	633,211	$	1,075,102
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of June 30, 2022	$	264,230	$	—	$	264,230
Activity for the three months ended September 30, 2022:
Change in gross goodwill due to translation	(6,281)		—		(6,281)
Gross goodwill	435,610		633,211		1,068,821
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of September 30, 2022	$	257,949	$	—	$	257,949

The components of our other intangible assets were as follows:

	Estimated Useful Life (in years)	September 30, 2022				June 30, 2022
(in thousands)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Technology-based and other	4 to 20	$	30,907	$	(22,242)		$	31,592	$	(22,734)
Customer-related	10 to 21	178,151		(104,948)			180,263		(104,698)
Unpatented technology	10 to 30	31,564		(23,396)			31,807		(22,950)
Trademarks	5 to 20	12,283		(10,471)			12,403		(10,317)
Trademarks	Indefinite	9,725		—			10,359		—
Total		$	262,630	$	(161,057)		$	266,424	$	(160,699)

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Segment Data

3 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENT DATA

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, 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.

INFRASTRUCTURE Our Infrastructure segment produces engineered tungsten carbide and ceramic components, earth-cutting tools, and advanced metallurgical powders, primarily for the 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; 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)	2022		2021
Sales:
Metal Cutting	$	299,936	$	298,430
Infrastructure	194,856		185,079
Total sales	$	494,792	$	483,509
Operating income:
Metal Cutting	$	28,605	$	29,164
Infrastructure	20,787		26,036
Corporate	(866)		(594)
Total operating income	48,526		54,606
Interest expense	6,638		6,321
Other expense (income), net	1,009		(3,459)
Income before income taxes	$	40,879	$	51,744

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

	Three Months Ended
	September 30, 2022			September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal	Metal Cutting	Infrastructure	Total Kennametal
Americas	45%	62%	51%	40%	58%	47%
EMEA	33	16	27	38	19	31
Asia Pacific	22	22	22	22	23	22

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

	Three Months Ended September 30, 2022
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	32%	46%
Transportation	27	—	16
Aerospace	10	—	6
Energy	7	32	17
Earthworks	—	36	15

	Three Months Ended September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	35%	48%
Transportation	28	—	17
Aerospace	9	—	5
Energy	7	29	16
Earthworks	—	36	14

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Fair Value Measurements (Tables)

3 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Financial instruments at fair value on recurring basis

As of September 30, 2022, 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)	$	—	$	230	$	—	$	230
Total assets at fair value	$	—	$	230	$	—	$	230
Liabilities:
Derivatives (1)	$	—	$	147	$	—	$	147
Total liabilities at fair value	$	—	$	147	$	—	$	147

 

As of June 30, 2022, 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)	$	—	$	176	$	—	$	176
Total assets at fair value	$	—	$	176	$	—	$	176
Liabilities:
Derivatives (1)	$	—	$	574	$	—	$	574
Total liabilities at fair value	$	—	$	574	$	—	$	574

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

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Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair value of derivatives

(in thousands)	September 30, 2022		June 30, 2022
Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	$	230	$	176
Other current liabilities - currency forward contracts	(147)		(574)
Total derivatives not designated as hedging instruments	83		(398)
Total derivatives	$	83	$	(398)

(Gains) losses related to derivatives not designated as hedging instruments

osses related to derivatives not designated as hedging instruments have been recognized as follows:

	Three Months Ended September 30,
(in thousands)	2022		2021
Other expense (income), net - currency forward contracts	$	(306)	$	140

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Restructuring (Tables)

3 Months Ended

Sep. 30, 2022

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring Reserve by Type of Cost

As of September 30, 2022, $4.5 million and $1.5 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, 2022, $6.0 million and $1.9 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively. The amounts are as follows:

(in thousands)	June 30, 2022		Expense		Asset Write-Down		Translation		Cash Expenditures		September 30, 2022
Severance	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007
Total	$	7,919	$	—	$	—	$	(426)	$	(1,486)	$	6,007

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Stock-Based Compensation (Tables)

3 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Changes in stock options

Changes in our stock options for the three months ended September 30, 2022 were as follows:

	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Aggregate Intrinsic value (in thousands)
Options outstanding, June 30, 2022	271,843	$	37.45
Exercised	—	—
Lapsed or forfeited	(31,163)	36.76
Options outstanding, September 30, 2022	240,680	$	37.54	1.9	$	—
Options vested, September 30, 2022	240,680	$	37.54	1.9	$	—
Options exercisable, September 30, 2022	240,680	$	37.54	1.9	$	—

Changes in time vesting and performance vesting restricted stock units

Changes in our performance vesting and time vesting restricted stock units for the three months ended September 30, 2022 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, 2022	350,955	$	33.44	1,213,896	$	33.53
Granted	189,469	27.27		693,410	27.24
Vested	—	—		(499,717)	32.10
Performance metric adjustments, net	(52,111)	27.58		—	—
Forfeited	—	—		(12,823)	32.14
Unvested, September 30, 2022	488,313	$	31.67	1,394,766	$	30.93

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Pension and Other Postretirement Benefits (Tables)

3 Months Ended

Sep. 30, 2022

Pension Plan [Member]

Defined Benefit Plan Disclosure [Line Items]

Net periodic pension (income)

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Service cost	$	238	$	286
Interest cost	8,040		5,659
Expected return on plan assets	(10,026)		(13,037)
Amortization of transition obligation	21		24
Amortization of prior service cost	2		3
Recognition of actuarial losses	1,105		2,970
Net periodic pension income	$	(620)	$	(4,095)

Other Postretirement Benefits Plan [Member]

Defined Benefit Plan Disclosure [Line Items]

Net periodic pension (income)

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

	Three Months Ended September 30,
(in thousands)	2022		2021
Interest cost	$	104	$	72
Amortization of prior service credit	(68)		(69)
Recognition of actuarial loss	48		74
Net periodic other postretirement benefit cost	$	84	$	77

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Inventories (Tables)

3 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following: 

(in thousands)	September 30, 2022		June 30, 2022
Finished goods	$	331,354	$	316,936
Work in process and powder blends	243,394		231,214
Raw materials	101,293		107,024
Inventories at current cost	676,041		655,174
Less: LIFO valuation	(84,571)		(84,338)
Total inventories	$	591,470	$	570,836

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Earnings Per Share (Tables) (Tables)

3 Months Ended

Sep. 30, 2022

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

The following table provides the computation of diluted shares outstanding for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
(in thousands)	2022	2021
Weighted-average shares outstanding during the period	81,544	83,880
Add: Unexercised stock options and unvested restricted stock units	621	871
Number of shares on which diluted earnings per share is calculated	82,165	84,751
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	1,249	482

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Equity (Tables)

3 Months Ended

Sep. 30, 2022

Equity [Abstract]

Summary of the changes in the carrying amounts of total equity, Kennametal shareholders' equity and equity attributable to noncontrolling interests

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, 2022 and 2021 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, 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(3)	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

	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, 2021	$	104,518	$	562,820	$	992,597	$	(330,327)	$	38,597	$	1,368,205
Net income	—		—		36,198		—		1,554		37,752
Other comprehensive loss	—		—		—		(12,094)		(455)		(12,549)
Dividend reinvestment	2		46		—		—		—		48
Capital stock issued under employee benefit and stock plans(3)	447		392		—		—		—		839
Purchase of capital stock	(440)		(12,468)		—		—		—		(12,908)
Cash dividends ($0.20 per share)	—		—		(16,740)		—		—		(16,740)
Total equity, September 30, 2021	$	104,527	$	550,790	$	1,012,055	$	(342,421)	$	39,696	$	1,364,647

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

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Sep. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Components of, and changes in 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, 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)

The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2021:

(in thousands)	Pension and other postretirement benefits		Currency translation adjustment		Derivatives		Total
Attributable to Kennametal:
Balance, June 30, 2021	$	(213,172)	$	(122,428)	$	5,273	$	(330,327)
Other comprehensive income (loss) before reclassifications	1,904		(16,021)		—		(14,117)
Amounts reclassified from AOCL	2,215		—		(192)		2,023
Net other comprehensive income (loss)	4,119		(16,021)		(192)		(12,094)
AOCL, September 30, 2021	$	(209,053)	$	(138,449)	$	5,081	$	(342,421)
Attributable to noncontrolling interests:
Balance, June 30, 2021	$	—	$	(3,982)	$	—	$	(3,982)
Other comprehensive loss before reclassifications	—		(455)		—		(455)
Net other comprehensive loss	—		(455)		—		(455)
AOCL, September 30, 2021	$	—	$	(4,437)	$	—	$	(4,437)

Reclassification out of Accumulated Other Comprehensive Loss

Reclassifications out of AOCL for the three months ended September 30, 2022 and 2021 consisted of the following:

	Three Months Ended September 30,
(in thousands)	2022		2021		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	$	21	$	24	Other income, net
Amortization of prior service credit	(66)		(66)		Other income, net
Recognition of actuarial losses	1,153		3,044		Other income, net
Total before tax	1,108		3,002
Tax impact	(302)		(787)		Provision for income taxes
Net of tax	$	806	$	2,215

Income Tax Allocated to Each Component of Other Comprehensive Income [Table Text Block]

The amount of income tax allocated to each component of other comprehensive loss for the three months ended September 30, 2022 and 2021 were as follows:

			2022						2021
(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	4,479		(1,155)		3,324		2,598		(694)		1,904
Reclassification of net pension and other postretirement benefit plans loss	1,108		(302)		806		3,002		(787)		2,215
Foreign currency translation adjustments	(52,799)		(150)		(52,949)		(16,457)		(19)		(16,476)
Other comprehensive loss	$	(47,467)	$	(1,544)	$	(49,011)	$	(11,112)	$	(1,437)	$	(12,549)

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The carrying amount of goodwill

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	$	441,891	$	633,211	$	1,075,102
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of June 30, 2022	$	264,230	$	—	$	264,230
Activity for the three months ended September 30, 2022:
Change in gross goodwill due to translation	(6,281)		—		(6,281)
Gross goodwill	435,610		633,211		1,068,821
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of September 30, 2022	$	257,949	$	—	$	257,949

The components of intangible assets

The components of our other intangible assets were as follows:

	Estimated Useful Life (in years)	September 30, 2022				June 30, 2022
(in thousands)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Technology-based and other	4 to 20	$	30,907	$	(22,242)		$	31,592	$	(22,734)
Customer-related	10 to 21	178,151		(104,948)			180,263		(104,698)
Unpatented technology	10 to 30	31,564		(23,396)			31,807		(22,950)
Trademarks	5 to 20	12,283		(10,471)			12,403		(10,317)
Trademarks	Indefinite	9,725		—			10,359		—
Total		$	262,630	$	(161,057)		$	266,424	$	(160,699)

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Segment Data (Tables)

3 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Disaggregation of Revenue [Table Text Block]

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

	Three Months Ended
	September 30, 2022			September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal	Metal Cutting	Infrastructure	Total Kennametal
Americas	45%	62%	51%	40%	58%	47%
EMEA	33	16	27	38	19	31
Asia Pacific	22	22	22	22	23	22

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

	Three Months Ended September 30, 2022
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	32%	46%
Transportation	27	—	16
Aerospace	10	—	6
Energy	7	32	17
Earthworks	—	36	15

	Three Months Ended September 30, 2021
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	56%	35%	48%
Transportation	28	—	17
Aerospace	9	—	5
Energy	7	29	16
Earthworks	—	36	14

Sales and operating income (loss) by segment and segment assets

Our sales and operating income by segment are as follows:

	Three Months Ended September 30,
(in thousands)	2022		2021
Sales:
Metal Cutting	$	299,936	$	298,430
Infrastructure	194,856		185,079
Total sales	$	494,792	$	483,509
Operating income:
Metal Cutting	$	28,605	$	29,164
Infrastructure	20,787		26,036
Corporate	(866)		(594)
Total operating income	48,526		54,606
Interest expense	6,638		6,321
Other expense (income), net	1,009		(3,459)
Income before income taxes	$	40,879	$	51,744

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Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets	$ 230	$ 176
Total assets at fair value	230	176
Derivatives Liabilities	147	574
Total liabilities at fair value	147	574
Fair Value, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets	230	176
Total assets at fair value	230	176
Derivatives Liabilities	147	574
Total liabilities at fair value	$ 147	$ 574

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Derivative Instruments and Hedging Activities - Fair Value of Derivatives Designated and Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Fair value of derivatives
Derivative, Fair Value, Net	$ 83	$ (398)
Not Designated as Hedging Instrument [Member]
Fair value of derivatives
Derivative, Fair Value, Net	83	(398)
Currency Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Fair value of derivatives
Derivative assets designated as hedging instruments	230	176
Currency Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Fair value of derivatives
Derivative liabilities designated as hedging instruments	$ (147)	$ (574)

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Derivative Instruments and Hedging Activities - Gains and Losses Related to Derivatives Not Designated as Hedging Instruments and to Cash Flow Hedges (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net Investment Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on Derivative Used in Net Investment Hedge, Net of Tax	$ 1,700	$ 1,300
Currency Forward Contracts [Member] | Other Nonoperating Income (Expense) [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, (Gain) Loss Recognized in Income, Net
Other income, net - currency forward contracts	$ (306)	$ 140

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Derivative Instruments and Hedging Activities (Details Textual) € in Millions, $ in Millions	3 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 EUR (€)	Jun. 30, 2022 EUR (€)
Net Investment Hedging [Member]
Derivatives, Fair Value [Line Items]
Derivative, Amount of Hedged Item | €			€ 0.0	€ 13.0
Net Investment Hedging [Member]
Derivatives, Fair Value [Line Items]
Gain (Loss) on Derivative Used in Net Investment Hedge, Net of Tax | $	$ 1.7	$ 1.3

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Restructuring and Related Charges - Restructuring Accrual (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Restructuring Reserve [Abstract]
Beginning Balance	$ 7,919
Restructuring Charges	0	$ 200
Asset Write-Down	0
Translation	(426)
Cash Expenditures	(1,486)
Ending Balance	6,007
Severance [Member]
Restructuring Reserve [Abstract]
Beginning Balance	7,919
Restructuring Charges	0
Asset Write-Down	0
Translation	(426)
Cash Expenditures	(1,486)
Ending Balance	$ 6,007

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Restructuring and Related Charges - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	$ 6,007		$ 7,919
Restructuring and Related Cost, Incurred Cost	0	$ 1,200
Restructuring Charges	0	200
Infrastructure [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost		0
Metal Cutting
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost		1,200
Cost of Sales [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Related Charges Recorded in Cost of Goods Sold or Operating Expense		$ 1,100
Other Current Liabilities [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	4,500		6,000
Other Liabilities [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	$ 1,500		$ 1,900

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Stock-Based Compensation - Changes in Stock Options (Details)	3 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Changes in stock options
Options outstanding, June 30, 2022 | shares	271,843
Options, Exercised | shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | shares	(31,163)
Options outstanding, September 30, 2022 | shares	240,680
Options vested and expected to vest, September 30, 2022 | shares	240,680
Options exercisable, September 30, 2022 | shares	240,680
Weighted Average Exercise Price, Options outstanding, June 30, 2022 | $ / shares	$ 37.45
Weighted Average Exercise Price, Exercised | $ / shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ / shares	36.76
Weighted Average Exercise Price, Options outstanding, September 30, 2022 | $ / shares	37.54
Weighted Average Exercise Price, Option vested and expected to vest, September 30, 2022 | $ / shares	37.54
Weighted Average Exercise Price, Options exercisable, September 30, 2022 | $ / shares	$ 37.54
Weighted Average Remaining Life, Options outstanding, September 30, 2022	1 year 10 months 24 days
Weighted Average Remaining Life, Options vested and expected to vest, September 30, 2022	1 year 10 months 24 days
Weighted Average Remaining Life, Options exercisable, September 30, 2022	1 year 10 months 24 days
Aggregate Intrinsic value, Options outstanding, September 30, 2022 | $	$ 0
Aggregate Intrinsic Value, Options vested and expected to vest, September 30, 2022 | $	0
Aggregate Intrinsic Value, Options exercisable, September 30, 2022 | $	$ 0

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Stock-Based Compensation - Changes in Restricted Stock Units (Details)	3 Months Ended
	Sep. 30, 2022 $ / shares shares
Restricted Stock Units - Performance Vesting [Member]
Changes in restricted stock awards
Unvested restricted stock awards, June 30, 2022, Shares | shares	350,955
Granted, Shares | shares	189,469
Vested, Shares | shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Forfeitures and Expirations | shares	(52,111)
Forfeited, Shares | shares	0
Unvested restricted stock awards, September 30, 2022 | shares	488,313
Weighted Average Fair Value, Unvested restricted stock awards, June 30, 2022 | $ / shares	$ 33.44
Weighted Average Fair Value, Granted | $ / shares	27.27
Weighted Average Fair Value, Vested | $ / shares	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Other Share Increase (Decrease) in Period, Weighted Average Exercise Price | $ / shares	27.58
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares	0
Weighted Average Fair Value, Unvested restricted stock awards, September 30, 2022 | $ / shares	$ 31.67
Restricted Stock Units - Time Vesting [Member]
Changes in restricted stock awards
Unvested restricted stock awards, June 30, 2022, Shares | shares	1,213,896
Granted, Shares | shares	693,410
Vested, Shares | shares	(499,717)
Performance metric adjustments, net, Shares | shares	0
Forfeited, Shares | shares	(12,823)
Unvested restricted stock awards, September 30, 2022 | shares	1,394,766
Weighted Average Fair Value, Unvested restricted stock awards, June 30, 2022 | $ / shares	$ 33.53
Weighted Average Fair Value, Granted | $ / shares	27.24
Weighted Average Fair Value, Vested | $ / shares	32.10
Weighted Average Fair Value, Performance Metric Not Achieved | $ / shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares	32.14
Weighted Average Fair Value, Unvested restricted stock awards, September 30, 2022 | $ / shares	$ 30.93

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Stock-Based Compensation (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Stock Option [Member]
Stock-Based Compensation (Textual) [Abstract]
Unrecognized compensation cost	$ 0.0
Total Intrinsic value of options exercised	0.0	$ 0.0
Restricted Stock Units (RSUs) [Member]
Stock-Based Compensation (Textual) [Abstract]
Compensation expense related to time vesting and performance vesting restricted stock units	7.8	$ 7.0
Unrecognized compensation cost	$ 38.7
Unrecognized compensation costs, weighted average period	2 years 1 month 6 days

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Pension and Other Postretirement Benefits - Components of Net Periodic Pension Income (Details) - Pension plans contribution [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net periodic pension income
Service cost	$ 238	$ 286
Interest cost	8,040	5,659
Expected return on plan assets	(10,026)	(13,037)
Amortization of transition obligation	21	24
Amortization of prior service cost (credit)	2	3
Recognition of actuarial losses	1,105	2,970
Net periodic pension income	$ (620)	$ (4,095)

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Pension and Other Postretirement Benefits - Components of Net Periodic Other Postretirement Benefit Cost (Details) - Other postretirement benefit plans [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net periodic other postretirement benefit costs
Interest cost	$ 104	$ 72
Amortization of prior service credit	(68)	(69)
Recognition of actuarial loss	48	74
Net periodic other postretirement benefit cost	$ 84	$ 77

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Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Inventories
Finished goods	$ 331,354	$ 316,936
Work in process and powder blends	243,394	231,214
Raw materials	101,293	107,024
Inventories at current cost	676,041	655,174
Less: LIFO valuation	(84,571)	(84,338)
Total inventories	$ 591,470	$ 570,836
Inventories (Textual) [Abstract]
Percentage of inventories valued by using LIFO method	40.00%	39.00%

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Long-Term Debt (Details) - USD ($)	Sep. 30, 2022	Jun. 30, 2022	Jun. 07, 2018
Long-Term Debt (Additional Textual) [Abstract]
Fixed rate at fair market value	$ 505,300,000	$ 536,100,000
Notes Payable	5,300,000	2,200,000
2018 Credit Agreement [Member]
Long-Term Debt (Textual) [Abstract]
Line of Credit Facility, Remaining Borrowing Capacity	620,100,000
Borrowing outstanding under 2018 Credit Agreement	79,900,000	$ 19,000,000
Line of Credit Facility, Maximum Borrowing Capacity			$ 700,000,000
Line of Credit [Member]
Long-Term Debt (Textual) [Abstract]
Net Debt to EBITDA Ratio, Maximum	3.75
Net Debt to EBITDA Ratio, domestic cash allowed to net debt, amount, minimum	$ 25,000,000

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Environmental Matters (Details) - USD ($) $ in Millions	Sep. 30, 2022	Jun. 30, 2022
Environmental Remediation Obligations [Abstract]
Reserves for Environmental Costs	$ 12.3	$ 12.5
Accrued Environmental Loss Contingencies, Current	$ 7.9	$ 7.9

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Income Taxes - Additional Information [Line Items]
Discrete Benefit for Swiss Tax Reform		$ 14.5
Income Tax (Textual) [Abstract]
Effective tax rate	27.50%	27.00%

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Earnings Per Shares (Details) - shares shares in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted Average Number of Shares Outstanding, Basic	81,544	83,880
Earnings Per Share (Textual) [Abstract]
Increase in weighted average shares due to dilutive effect of unexercised capital stock options and unvested restricted stock units	621	871
Weighted Average Number of Shares Outstanding, Diluted	82,165	84,751
Unexercised capital stock options and restricted stock units excluded from computation of diluted EPS	1,249	482

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Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Beginning Balance	$ 1,291,247	$ 1,368,205
Net income (loss)	29,637	37,752
Other comprehensive income (loss)	(49,011)	(12,549)
Dividend reinvestment	46	48
Capital stock issued under employee benefit and stock plans	3,482	839
Purchase of capital stock	(19,376)	(12,908)
Cash dividends	(16,276)	(16,740)
Ending Balance	1,238,345	1,364,647
Capital stock [Member]
Beginning Balance	101,671	104,518
Dividend reinvestment	2	2
Capital stock issued under employee benefit and stock plans	454	447
Purchase of capital stock	(1,032)	(440)
Ending Balance	101,095	104,527
Additional paid-in capital [Member]
Beginning Balance	494,202	562,820
Dividend reinvestment	44	46
Capital stock issued under employee benefit and stock plans	3,028	392
Purchase of capital stock	(18,344)	(12,468)
Ending Balance	478,930	550,790
Retained earnings [Member]
Beginning Balance	1,070,655	992,597
Net income (loss)	28,196	36,198
Cash dividends	(16,276)	(16,740)
Ending Balance	1,082,575	1,012,055
Accumulated other comprehensive loss [Member]
Beginning Balance	(413,951)	(330,327)
Other comprehensive income (loss)	(47,246)	(12,094)
Ending Balance	(461,197)	(342,421)
Non-controlling interest [Member]
Beginning Balance	38,670	38,597
Net income (loss)	1,441	1,554
Other comprehensive income (loss)	(1,765)	(455)
Cash dividends	(1,404)
Ending Balance	$ 36,942	$ 39,696

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Accumulated Other Comprehensive Loss - Components of and Changes in Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Accumulated Other Comprehensive (Loss) Income [Line Items]
Accumulated Other Comprehensive Loss, Net of Tax	$ (413,951)	$ (330,327)
Other comprehensive (loss) income before reclassifications	(47,860)	(14,117)
Amounts reclassified from accumulated other comprehensive loss	614	2,023
Net current period other comprehensive (loss) income	(47,246)	(12,094)
Accumulated Other Comprehensive Loss, Net of Tax	(461,197)	(342,421)
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Accumulated Other Comprehensive Loss, Net of Tax	(208,406)	(213,172)
Other comprehensive (loss) income before reclassifications	3,324	1,904
Amounts reclassified from accumulated other comprehensive loss	806	2,215
Net current period other comprehensive (loss) income	4,130	4,119
Accumulated Other Comprehensive Loss, Net of Tax	(204,276)	(209,053)
Accumulated Currency Translation Adjustment [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Accumulated Other Comprehensive Loss, Net of Tax	(210,048)	(122,428)
Other comprehensive (loss) income before reclassifications	(51,184)	(16,021)
Amounts reclassified from accumulated other comprehensive loss	0	0
Net current period other comprehensive (loss) income	(51,184)	(16,021)
Accumulated Other Comprehensive Loss, Net of Tax	(261,232)	(138,449)
Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Accumulated Other Comprehensive Loss, Net of Tax	4,503	5,273
Other comprehensive (loss) income before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive loss	(192)	(192)
Net current period other comprehensive (loss) income	(192)	(192)
Accumulated Other Comprehensive Loss, Net of Tax	4,311	5,081
Noncontrolling Interest [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Accumulated Other Comprehensive Loss, Net of Tax	(7,547)	(3,982)
Other comprehensive (loss) income before reclassifications	(1,765)	(455)
Net current period other comprehensive (loss) income	(1,765)	(455)
Accumulated Other Comprehensive Loss, Net of Tax	(9,312)	(4,437)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	(1,108)	(3,002)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive (Loss) Income [Line Items]
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	$ 255	$ 255

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Accumulated Other Comprehensive Loss - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items]
Currency exchange contracts	$ (1,009)	$ 3,459
Recognition of actuarial losses	1,108	3,002
Provision for income taxes	11,242	13,992
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items]
Total before tax	(255)	(255)
Net of tax	(192)	(192)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items]
Amortization of transition obligations	21	24
Amortization of prior service credit	(66)	(66)
Recognition of actuarial losses	1,153	3,044
Total before tax	1,108	3,002
Provision for income taxes	(302)	(787)
Net of tax	(806)	(2,215)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Forward Starting Interest Rate Swap Contracts [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items]
Forward starting interest rate swaps	$ (255)	$ (255)

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Accumulated Other Comprehensive Loss Other Comprehensive Income - Income Tax Allocated to Each Component (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Other Comprehensive Income - Income Tax Allocated to Each Component [Abstract]
Unrecognized net pension and other postretirement benefit (loss) gain, before tax	$ 4,479	$ 2,598
Unrecognized net pension and other postretirement benefit (loss) gain, tax	(1,155)	(694)
Unrecognized net pension and other postretirement benefit (loss) gain, net of tax	3,324	1,904
Reclassification of net pension and other postretirement benefit loss, before tax	1,108	3,002
Reclassification of net pension and other postretirement benefit loss, tax	(302)	(787)
Reclassification of net pension and other postretirement benefit loss	806	2,215
Foreign currency translation adjustments, before tax	(52,799)	(16,457)
Foreign currency translation adjustments, tax	(150)	(19)
Foreign currency translation adjustments, net of tax	(52,949)	(16,476)
Other comprehensive income (loss), before tax	(47,467)	(11,112)
Other comprehensive income (loss), tax	(1,544)	(1,437)
Other comprehensive income (loss), net of tax	(49,011)	(12,549)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	63	63
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	(255)	(255)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax	$ 192	$ 192

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Goodwill and Other Intangible Assets - Carrying Amount of Goodwill Attributable to Each Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Goodwill [Roll Forward]
Gross goodwill	$ 1,068,821	$ 1,075,102
Accumulated impairment losses	(810,872)	(810,872)
Goodwill, Beginning Balance	264,230
Change in gross goodwill due to translation	(6,281)
Goodwill, Ending Balance	257,949
Infrastructure [Member]
Goodwill [Roll Forward]
Gross goodwill	633,211	633,211
Accumulated impairment losses	(633,211)	(633,211)
Goodwill, Beginning Balance	0
Change in gross goodwill due to translation	0
Goodwill, Ending Balance	0
Metal Cutting
Goodwill [Roll Forward]
Gross goodwill	435,610	441,891
Accumulated impairment losses	(177,661)	$ (177,661)
Goodwill, Beginning Balance	264,230
Change in gross goodwill due to translation	(6,281)
Goodwill, Ending Balance	$ 257,949

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Goodwill and Other Intangible Assets - Components of Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
The components of intangible assets
Accumulated amortization	$ (161,057)	$ (160,699)
Intangible Assets, Gross (Excluding Goodwill)	262,630	266,424
Trademarks [Member]
The components of intangible assets
Gross carrying amount, Indefinite	9,725	10,359
Technology-based and other [Member]
The components of intangible assets
Gross carrying amount, finite	30,907	31,592
Accumulated amortization	(22,242)	(22,734)
Customer-related [Member]
The components of intangible assets
Gross carrying amount, finite	178,151	180,263
Accumulated amortization	(104,948)	(104,698)
Unpatented technology [Member]
The components of intangible assets
Gross carrying amount, finite	31,564	31,807
Accumulated amortization	(23,396)	(22,950)
Trademarks [Member]
The components of intangible assets
Gross carrying amount, finite	12,283	12,403
Accumulated amortization	$ (10,471)	$ (10,317)
Minimum [Member] | Technology-based and other [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	4 years
Minimum [Member] | Customer-related [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	10 years
Minimum [Member] | Unpatented technology [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	10 years
Minimum [Member] | Trademarks [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	5 years
Maximum [Member] | Technology-based and other [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	20 years
Maximum [Member] | Customer-related [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	21 years
Maximum [Member] | Unpatented technology [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	30 years
Maximum [Member] | Trademarks [Member]
The components of intangible assets
Useful life related to technology-based intangible assets	20 years

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Segment Data - Sales and Operating (Loss) Income by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Segment Reporting Information [Line Items]
Assets	$ 2,516,208		$ 2,573,524
External sales:
Sales	494,792	$ 483,509
Operating (income) loss:
Total operating income	48,526	54,606
Interest expense	6,638	6,321
Other expense (income), net	1,009	(3,459)
Income before income taxes	40,879	51,744
Infrastructure [Member]
External sales:
Sales	194,856	185,079
Operating (income) loss:
Total operating income	(20,787)	(26,036)
Corporate [Member]
Operating (income) loss:
Total operating income	866	594
Metal Cutting
External sales:
Sales	299,936	298,430
Operating (income) loss:
Total operating income	$ (28,605)	$ (29,164)

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Segment Data Disaggregation of Revenue (Details)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
General Engineering [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	46.00%	48.00%
Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	16.00%	17.00%
Aerospace [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	6.00%	5.00%
Energy [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	17.00%	16.00%
Earthworks [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	15.00%	14.00%
Americas [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	51.00%	47.00%
EMEA [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	27.00%	31.00%
Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	22.00%	22.00%
Infrastructure [Member] | General Engineering [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	32.00%	35.00%
Infrastructure [Member] | Energy [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	32.00%	29.00%
Infrastructure [Member] | Earthworks [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	36.00%	36.00%
Infrastructure [Member] | Americas [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	62.00%	58.00%
Infrastructure [Member] | EMEA [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	16.00%	19.00%
Infrastructure [Member] | Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	22.00%	23.00%
Metal Cutting | General Engineering [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	56.00%	56.00%
Metal Cutting | Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	27.00%	28.00%
Metal Cutting | Aerospace [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	10.00%	9.00%
Metal Cutting | Energy [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	7.00%	7.00%
Metal Cutting | Americas [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	45.00%	40.00%
Metal Cutting | EMEA [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	33.00%	38.00%
Metal Cutting | Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Revenues, percent	22.00%	22.00%