Kennametal Inc. · NYSE:KMT
Kennametal — Investor Day (September 2023)
90 slides from Kennametal's investor day presentation, Sep 8, 2023
Slide 1: Transforming How Everyday Life is Built
Transforming How Everyday Life is Built Kennametal Investor Day 2023 September 8, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this release may be forward-looking in nature, or “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not rel
Slide 3: Today’s Agenda
Today’s Agenda 09:30 OPENING STATEMENTS KENNAMETAL’S STRATEGY 09:35 Christopher Rossi, President & CEO GROWTH WITHIN METAL CUTTING 10:00 Sanjay Chowbey, VP & President, Metal Cutting GROWTH WITHIN INFRASTRUCTURE 10:20 Franklin Cardenas, VP & President, Infrastructure 10:40 BREAK AND INNOVATION SHOWC
Slide 4: Strategic Overview
Strategic Overview Christopher Rossi President & CEO 4
Slide 5: Unrivaled expertise in tool and wear-resistant solutions across diversified end markets
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Unrivaled expertise in tool and wear-resistant solutions across diversified end markets >85 Leading supplier to industries with a diverse and global sales network Years of Engineering across Metal Cutting and Infrastructure segments Ex
Slide 6: Complementary segments enhance competitive advantages
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Complementary segments enhance competitive advantages METAL CUTTING INFRASTRUCTURE Solutions to run longer, cut faster and Technology-led business delivering machine with greater precision wear and earth cutting solutions 7% Leveraging
Slide 7: Simplification/Modernization initiatives enable accelerated growth
TH S I MEPK LEI FNI C N AT A MI E OTA N/M LOAD DEVA R N ITA Z AT G EI O N : K E Y E N A B L E R T O L O N G - T E R M S U C C E S S Simplification/Modernization initiatives enable accelerated growth Simplification Culture of Streamline structure to enable Reduce product Gaining Strengthening account
Slide 8: Strategic pillars enable our enterprise strategy
S I M P L I F I C AT I O N / M O D E R N I Z AT I O N : K E Y E N A B L E R T O L O N G - T E R M S U C C E S S Strategic pillars enable our enterprise strategy Simplification / Modernization in Action Innovation Commercial Operational ~$200M Advantage Excellence Excellence In structural cost saving
Slide 9: Simplification/Modernization accelerates Operational Excellence initiatives
S I M P L I F I C AT I O N / M O D E R N I Z AT I O N : K E Y E N A B L E R T O L O N G - T E R M S U C C E S S Simplification/Modernization accelerates Operational Excellence initiatives Operational Results at Further Excellence Orwell Factory Efficiency Ahead More consistent quality and Utilize Sm
Slide 10: Strategic pillars foundational to driving sustainable competitive advantages
L O N G - T E R M G R O W T H B U I LT O N S T R AT E G I C P I L L A R S Strategic pillars foundational to driving sustainable competitive advantages Leveraging Application Driving customer- Sustainable Innovation metallurgy and aligned innovation engineering and Competitive Advantages Advantage Ma
Slide 11: Accelerating Growth: The next chapter of our evolution
BC A UC I LEDLI E NRGAT ONI NT GHG E RSOUW CTCHE S S O F S I M P L I F I C AT I O N / M O D E R N I Z AT I O N Accelerating Growth: The next chapter of our evolution Targeted Capacity Capitalizing Strengthening expansion in Optimization 2.0 on global our strategic underserved & Operational megatrend
Slide 12: Capitalizing on global megatrends
A C C E L E R AT I N G G R O W T H Capitalizing on global megatrends Post COVID Growing global Increasing Geopolitical Evolving Government economic middle class demand instability workforce infrastructure recovery driving spending for energy driving prioritization creating greater need investment st
Slide 13: Attractive TAM opportunity
A C C E L E R AT I N G G R O W T H Attractive TAM opportunity SERVING ATTRACTIVE END MARKETS Aerospace & Defense Diversified geographic and end market exposure mitigates risk Expanded Focus Areas Energy $22B Total Addressable Expanding into other applications, customer segments, and regions Earthwor
Slide 14: Expanded focus areas to drive growth above market
A C C E L E R AT I N G G R O W T H Expanded focus areas to drive growth above market EXPANDED FOCUS AREAS END MARKETS Medical Job Shops Ceramics General Engineering Expanded Aerospace Focus Areas Airframes Ceramics US DOD Components & Defense Clean Finished Oil Total Addressable Ceramics Energy Mark
Slide 15: Metal Cutting Aerospace & Defense: Demonstrated model for future growth
A C C E L E R AT I N G G R O W T H Metal Cutting Aerospace & Defense: Demonstrated model for future growth OPERATING FROM A POSITION OF STRENGTH RECOVERING MACRO ENVIRONMENT WITH FURTHER MARKET SHARE OPPORTUNITIES Long-term market fundamentals are soaring Aerospace & Defense growth has ~34% ~44% wit
Slide 16: Strong growth strategy underpinned by strategic pillars
A C C E L E R AT I N G G R O W T H Strong growth strategy underpinned by strategic pillars 1 INNOVATION Bolt-on ADVANTAGE acquisitions Targeting expanded focus 2 COMMERCIAL Expanding Capitalizing on global areas leadership megatrends EXCELLENCE positions in existing markets 3 OPERATIONAL ATTRACTIVE
Slide 17: Positioned to deliver growth, profitability, and strong returns through FY27
D E L I V E R I N G S T R O N G G R O W T H A N D P R O F I TA B I L I T Y I M P R O V E M E N T S Positioned to deliver growth, profitability, and strong returns through FY27 Adjusted EBITDA Adjusted EPS FOCF as % of Adjusted ROIC Organic Sales Margin Adj. Net Income 4 – 6% 20 – 23% 20 – 25% >100%
Slide 18: Focused approach to ESG, aligned with core values
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Focused approach to ESG, aligned with core values Visit our website Environmental for just-released THE KENNAMETAL WAY FY23 ESG Report Reduce resource consumption Eliminate environmental risk Safety Accountability Develop consistent en
Slide 19: World class management team drawing on over 200 years of combined industry experience
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT World class management team drawing on over 200 years of combined industry experience Michael Pici VP, Investor Relations Joined KMT: 2023 Michelle Keating VP, Secretary & General Counsel Joined KMT: 2010 Christopher Franklin Sanjay Dr
Slide 20: A compelling investment opportunity
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT A compelling investment opportunity Sustainable • Deep customer insight and application expertise in core markets Competitive • Materials Science and engineering expertise Advantages • Advanced product development and innovative produc
Slide 21: Metal Cutting
Metal Cutting Sanjay Chowbey Vice President & President of Metal Cutting 21
Slide 22: Solutions to run longer, cut faster, and machine with greater precision
O U R M E TA L C U T T I N G B U S I N E S S Solutions to run longer, cut faster, and machine 55% 27% 11% 7% with greater precision General Engineering Transportation Aerospace & Defense Energy ~$1.27B ~85 40,000+ Annual sales countries served customers General EV Aerospace Wind Engineering Medical
Slide 23: Leveraging our strategic pillars to outperform
O U R M E TA L C U T T I N G B U S I N E S S Leveraging our strategic pillars to outperform Innovation Robust new product Advanced manufacturing capabilities >25% development pipeline supports of annual sales from custom Advantage high-growth opportunities enable high-value added products solutions
Slide 24: Proven leadership position in Metal Cutting
O U R M E TA L C U T T I N G B U S I N E S S Proven leadership position in Metal Cutting Quarterly Year over Year Sales Growth KMT MC Growth Rates versus Industry Growth Rates (Year over Year) (in Constant Currency) 35% 15% 15% 10% 30% 5% 5% 25% -5% 0% 20% -15% -5% FY 21 FY22 FY23 FY21 FY22 FY23 15%
Slide 25: Participate in attractive total addressable market with incremental expansion opportunities
WELL POSITIONED FOR LONG-TERM GROWTH Participate in attractive total addressable market with incremental expansion opportunities Attractive TAM Positive market Opportunity in Opportunity in & megatrends historical TAM expanded TAM Expanded Focus Areas Post COVID economic recovery Aerospace & Defense
Slide 26: Targeting growth outpacing our markets
WELL POSITIONED FOR LONG-TERM GROWTH Targeting growth outpacing our markets Combination of current leading position, megatrends and new growth opportunities drives market share expansion Market Trends Accelerating Share Capture (Market CAGR 2023 – 2027) Through Strategic Pillars Aerospace & Defense
Slide 27: Attractively positioned to capitalize on positive underlying market trends
WELL POSITIONED FOR LONG-TERM GROWTH Attractively positioned to capitalize on positive underlying market trends POSITIVE MEGATRENDS Post COVID economic Growing global middle class Increasing demand for Evolving workforce recovery still ahead driving spending and consumption energy creating greater n
Slide 28: With targeted opportunities in historical and expanded TAM
WELL POSITIONED FOR LONG-TERM GROWTH END MARKETS EXPANDED FOCUS AREA Aerospace Airframe and Components Building on position of strength in engines, & Defense expanding into airframes and other components With targeted Transportation Hybrid and Electric Vehicles opportunities in New projects at legac
Slide 29: Aerospace & Defense: Operating from a position of strength
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Aerospace & Defense Aerospace & Defense: Operating from a position of strength THE OPPORTUNITY HOW WE WIN Innovation Advantage Building on position of strength in engines, expanding into airframes and Technical collaboration to find other components inn
Slide 30: Aerospace & Defense: Expanding leadership position
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Aerospace & Defense Aerospace & Defense: Expanding leadership position Market Share Accelerating Sales New Customer DEMONSTRATED Expansion Growth Acquisition SUCCESS FOR KENNAMETAL 35% sales growth >30% growth in Expanded new per plane with major opport
Slide 31: Transportation Market: Evolution drives mix shift and growth opportunity
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Transportation Transportation Market: Evolution drives mix shift and growth opportunity Well positioned to serve as a strategic partner to entire EV supply chain Total vehicle units to increase at 2% CAGR1, Serving HEV & BEV Applications tooling demand
Slide 32: Transportation Market: Well positioned to capture higher market share with shifting mix
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Transportation Transportation Market: BUILDING A POSITION OF STRENGTH Well positioned to capture higher market share with shifting mix Accelerating Sales Growth THE OPPORTUNITY HOW WE WIN 3x growth new New HEV and BEV projects at project wins YOY legacy
Slide 33: Medical: Leveraging expertise into new markets and applications
WELL POSITIONED FOR LONG-TERM GROWTH Growth in General Engineering Medical: Leveraging expertise BUILDING A POSITION OF STRENGTH into new markets and applications THE OPPORTUNITY HOW WE WIN Materials Science Expanding into growing medical Expertise device application space Material similarities Inno
Slide 34: Expanding customer reach through Commercial Excellence and Digital Customer Experience
WELL POSITIONED FOR LONG-TERM GROWTH Growth in General Engineering Expanding customer reach through Commerical Excellence and Digital Customer Experience THE OPPORTUNITY: Improving content SMALL & MEDIUM GENERAL Innovation and engagement to Customer-led innovation and new ENGINEERING SHOPS Advantage
Slide 35: Kennametal advantage allows us to tailor solutions to address customer needs
M E TA L C U T T I N G D R I V E S O U R B U S I N E S S F O R WA R D Kennametal advantage allows us to tailor solutions to address customer needs FOCUSED CUSTOMERS AND MARKET OPPORTUNITIES Aerospace & Defense Transportation Medical General Engineering Weighted favorably with Rapid shift to hybrid G
Slide 36: Targeted opportunities driving organic sales growth
M E TA L C U T T I N G D R I V E S O U R B U S I N E S S F O R WA R D Targeted opportunities driving organic sales growth 5 - 7% CAGR Sales Market and Price Share Gain Initiatives Initiatives $1.27B + Positive market + Gain share in and megatrends traditional end markets Comprehensive Penetrate new
Slide 37: Metal Cutting: Well positioned to create value for shareholders
M E TA L C U T T I N G D R I V E S O U R B U S I N E S S F O R WA R D Metal Cutting: Well positioned to create value for shareholders Market-leading proven solutions available globally in growing end markets Growth initiatives capitalizing on global megatrends and expanded TAM Above Market Strong cu
Slide 38: Infrastructure
Infrastructure Franklin Cardenas Vice President & President, Infrastructure 38
Slide 39: Innovative solutions to address wear and earth-cutting customer challenges
OUR INFRASTRUCTURE BUSINESS Innovative solutions to address wear and earth-cutting customer 36% 34% 24% 6% challenges in diversified Earthworks General Engineering Energy Aerospace & Defense end markets Mining Tool Manufacturing Oil & Gas Aerospace $0.81B ~85 10,000+ Annual sales countries served
Slide 40: Strategic pillars enable our infrastructure strategy
OUR INFRASTRUCTURE BUSINESS Strategic pillars enable our infrastructure strategy 80 years of proven innovation in wear and earth-cutting solutions Innovation Product and process innovation Proprietary powder formulation improves Solutions to meet customers most ~30% Advantage to meet evolving compon
Slide 41: Attractive total addressable market with expansion opportunities
WELL POSITIONED FOR LONG-TERM GROWTH Attractive total addressable market with expansion opportunities Attractive TAM Positive market Opportunity in Opportunity in Expanded & megatrends historical TAM expanded TAM Focus Areas Government infrastructure investment Drive sales effectiveness Defense Incr
Slide 42: Well positioned to win in large and growing end markets
WELL POSITIONED FOR LONG-TERM GROWTH Well positioned to win in large and growing end markets Combination of current leading position, megatrends and new growth opportunities drives market share expansion Market Trends Accelerating Share Capture (Market CAGR 2023 – 2027) with Strategic Pillars Aerosp
Slide 43: Primed to capitalize on positive market trends
WELL POSITIONED FOR LONG-TERM GROWTH Primed to capitalize on positive market trends POSITIVE MARKET AND MEGATRENDS Government Increasing Demand Growing Global Middle Class Geopolitical Instability Infrastructure Investment for Energy driving spending and creating environment driving construction gro
Slide 44: Leveraging excellence in strategic pillars to gain share in growing end markets
WELL POSITIONED FOR LONG-TERM GROWTH END MARKETS EXPANDED FOCUS AREA Aerospace Defense Building on strong position in EMEA to expand our & Defense presence in US Defense market Leveraging excellence in General Ceramics Expanding beyond core evaporator boat business and strategic pillars Engineering
Slide 45: Defense: Delivering high-performing solutions to support the US Department of Defense and its allies
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Aerospace & Defense Defense: Delivering high-performing DEMONSTRATED SUCCESS solutions to support the US Department of Defense and its allies 3 THE OPPORTUNITY HOW WE WIN OEM approvals Grow defense munitions business beyond Europe and expand into adjace
Slide 46: Ceramics: Expand beyond core business and accelerate diversification
WELL POSITIONED FOR LONG-TERM GROWTH Growth in General Engineering Ceramics: Expand beyond core LEVERAGING A POSITION OF STRENGTH business and accelerate diversification Leading market share in evaporator boats used in process to foil coat food packaging material THE OPPORTUNITY HOW WE WIN High Marg
Slide 47: Mining: Strong foundation & proven solutions enable growth in underserved markets
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Earthworks Mining: Strong foundation & STRONG FOUNDATION proven solutions enable growth FOR GROWTH in underserved markets Differentiated Market Leading Products THE OPPORTUNITY Expanding with differentiated solutions in minerals, HOW WE WIN Surface mini
Slide 48: Oil & Gas: Engineering solutions to support energy innovation
WELL POSITIONED FOR LONG-TERM GROWTH Growth in Energy Oil & Gas: Engineering solutions STRONG FOUNDATION to support energy innovation FOR GROWTH Established joint development & THE OPPORTUNITY innovation agreements Expanding share through customer HOW WE WIN with 3 of the top oil relationships and d
Slide 49: Delivering tailored solutions to address customer’s wear and earth-cutting challenges
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Delivering tailored solutions to address customer’s wear and earth-cutting challenges FOCUSED CUSTOMER AND MARKET OPPORTUNITIES Small End User Distributor OEM Larger End User Defense “I want information and “ My customers want trus
Slide 50: Targeted opportunities delivering organic sales and market share growth
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Targeted opportunities delivering organic sales and market share growth 3 - 5% CAGR Sales Market and Price Share Gain Initiatives Initiatives Positive market Gain share in + and megatrends + traditional end markets $808M Penetrate
Slide 51: Infrastructure: Well positioned to create value for shareholders
I N F R A S T R U C T U R E D R I V E S O U R B U S I N E S S F O R WA R D Infrastructure: Well positioned to create value for shareholders Market-leading proven solutions available globally in growing end markets Growth initiatives capitalizing on global megatrends and expanded TAM Above Market Str
Slide 52: 15 Minute Break
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Slide 53: Technology & Innovation Advantage
Technology & Innovation Advantage Dr. Carlonda Reilly Vice President & CTO 53
Slide 54: World-class technology capabilities power innovation engine
T E C H N O L O G Y & I N N O VAT I O N A D VA N TA G E World-class technology capabilities >500 Global Scientists power innovation engine and Engineers 3 DIFFERENTIATING CAPABILITIES LEVERAGED ACROSS THE SEGMENTS Global R&D Centers Materials Additive Manufacturing 22 Science Unique, powder producti
Slide 55: Innovation differentiators enable growth and margin expansion
T E C H N O L O G Y & I N N O VAT I O N A D VA N TA G E Innovation differentiators enable growth and margin expansion Expertise carries across both segments with specialists focused by business and products Differentiated Leveraging Extending Customer-led and Market- Technology Technology Innovation
Slide 56: Innovation differentiators enable further enhancement of strategic pillars
C U S T O M E R - L E D I N N O VAT I O N Innovation differentiators enable further enhancement of strategic pillars Differentiated market Leading application and Additive Innovation leading products Manufacturing capabilities Advantage Driving share gains Enable differentiated solutions Customer-le
Slide 57: Increasing Sales Growth Potential
C U S T O M E R - L E D I N N O VAT I O N Investment in innovation driving pace in delivery of higher-valued, differentiated products R&D/Innovation Investment Focus Focused portfolio New technology Increasing Sales Growth Potential of higher-valued, differentiated products • addressing megatrends
Slide 58: Innovation operating system ensures differentiated products and solutions
C U S T O M E R - L E D I N N O VAT I O N Innovation operating system ensures differentiated products and solutions Innovative products Market & Customer & solutions that Insights Product Customer customers want Applications Design Engineers translate insights into technical challenges and solutions
Slide 59: Innovation process enables development of higher-value, in-demand products
C U S T O M E R - L E D I N N O VAT I O N Innovation process enables development of higher-value, in-demand products ~20% faster innovation time to launch Product than before to market Simplification/ Modernization ~2X total anticipated sales IDEATION/VALIDATE PILOT AND LAUNCH AND impact DEVELOPMENT
Slide 60: Innovation system in action
D I F F E R E N T I AT E D P R O D U C T D E V E L O P M E N T A N D P O R T F O L I O Innovation system in action Increased Differentiated Value Increased Speed to Market FIX8TM Tooling System KORTM THE KING OF ROUGHING Industry leading turning technology for a wide range of applications From conce
Slide 61: Award-winning innovations drive growth in our target markets
D I F F E R E N T I AT E D P R O D U C T D E V E L O P M E N T A N D P O R T F O L I O Award-winning innovations drive growth in our target markets PROPRIETARY NEW PRODUCTS General Engineering Aerospace Mining Energy Electric Vehicles Transportation Aerospace Preferred product “Winner OEM in Lockhee
Slide 62: Technology roadmap designed to enable share gain and base business growth
D I F F E R E N T I AT E D P R O D U C T D E V E L O P M E N T A N D P O R T F O L I O Technology roadmap designed to enable share gain and base business growth FY24 – FY27 FY24 – FY27 METAL CUTTING INFRASTRUCTURE Turning Innovations Wear Solution Innovations Holemaking Innovations Construction Inno
Slide 63: Ceramics: Building on core Materials Science strength to expand product offerings
LEVERAGING TECHNOLOGY ACROSS THE SEGMENTS Ceramics: Building on core Materials Science strength to expand product offerings Core Expertise: currently supporting ~$90M Ceramics business across the enterprise MATERIAL Silicon Nitride, CLASSES Titanium Diboride, Boron Nitride Sialon, Boron Carbide • Ev
Slide 64: Ceramics expertise enables attractive new applications that align with global megatrends
WELL POSITIONED FOR LONG-TERM GROWTH Ceramics expertise enables attractive new applications that align with global megatrends MARKETS Aerospace & Defense Energy General Engineering END Defense Opportunity Clean Energy Opportunity Medical Opportunity FOCUS AREA Ball Bearings & Valves EXPANDED KennaSh
Slide 65: Leadership position in Additive Manufacturing expertise enables differentiated solutions
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Leadership position in Additive Manufacturing expertise enables differentiated solutions KENionic™ Technology KenTip™ FS Flow Control Device Electric Vehicles General Engineering Energy OPTIMIZED INCREASED LEAD TIME PERFORMANCE FUNCTIO
Slide 66: Digital Customer Experience (DCX) extends technical reach to small and medium-sized customers
EXTENDING TECHNOLOGY REACH Digital Customer Experience (DCX) extends technical reach to small and medium-sized customers Enhanced customer KMT Collaboration Space experience at 1 Customer request for best solutions to make complex components COLLABORATION TEAM kennametal.com 2 Rules engine delivers
Slide 67: Innovation Advantage creating value for shareholders
T E C H N O L O G Y S U M M A RY Innovation Advantage creating value for shareholders Delivering customer-led innovation enabled through customer insights and a disciplined innovation framework Driving differentiated and market-leading products through science, engineering and process expertise that
Slide 68: Financial Strategy
Financial Strategy Patrick Watson Vice President & CFO 68
Slide 69: Successful execution of Simplification/Modernization enables pathway for growth
WELL POSITIONED FOR THE NEXT PHASE OF GROWTH Successful execution of Simplification/Modernization enables pathway for growth 24 Advanced product Innovation Above Faster speed new products development and to market Advantage launched in FY23 Materials Science expertise Market Aerospace Growth Commerc
Slide 70: Reaffirming our 2024 Outlook
WELL POSITIONED FOR THE NEXT PHASE OF GROWTH Reaffirming our 2024 Outlook OUTLOOK CONSIDERS THE FY24 TOTAL YEAR OUTLOOK FOLLOWING ASSUMPTIONS Sales + Inflationary environment continues to moderate $2.1 - $2.2B ~(2) - 3% ~3% Neutral Volume growth Price realization Foreign exchange + End markets conti
Slide 71: Targeted opportunities delivering organic sales and market share growth
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Targeted opportunities delivering organic sales and market share growth 4 - 6% CAGR Sales Market and Price Share Gain Initiatives Initiatives Positive market and Gain share in + megatrends + traditional end markets $2.08B Comprehen
Slide 72: Strategic initiatives position KMT to deliver share gain
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Strategic initiatives position KMT to deliver share gain Strategic Growth Initiatives Electric General Aerospace Medical Mining Ceramics Oil & Gas Vehicles Engineering & Defense End Market Win new Target Leverage Drive share Indust
Slide 73: Improving customer service and expanding profitability through Operational Excellence
DO C R IMVM I NI T GTO EDP ETROAT GIR OONW ALT HE X ACNE DLM LEAN RCGEI N E X PA N S I O N Improving customer service and expanding profitability through Operational Excellence Operational Working Capital The Kennametal Way Performance Improvements Continuous improvement Advanced process technology
Slide 74: Operational Excellence leading to margin expansion
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Operational Excellence leading to margin expansion Optimizing Continuous inventory levels operational $100M to improve improvement customer of approximately experience at 1% of Cost of a lower cost Sales per year Operational Excell
Slide 75: Business strategy driving profitable growth
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Business strategy driving profitable growth 20 - 23% 75
Slide 76: Strong free operating cash flow >100% of adjusted net income
B A L A N C E D A P P R O A C H T O C A P I TA L A L L O C AT I O N Strong free operating cash flow >100% of Demonstrated Capability adjusted net income Cash conversion of 130% in FY23 Free Operating Provides Significant Opportunity Cash Flow Conversion Reinvest in the business to fund growth and re
Slide 77: Capital allocation maximizes shareholder value while funding growth
B A L A N C E D A P P R O A C H T O C A P I TA L A L L O C AT I O N Capital allocation maximizes shareholder value while funding growth Maintain investment-grade credit rating Strategic Growth Initiatives Reinvesting in the business in support of organic, profitable growth and margin expansion Posit
Slide 78: Disciplined M&A strategy to support growth
C O M M I T T E D T O G R O W T H A N D M A R G I N E X PA N S I O N Disciplined M&A strategy to support growth Margin Accretive Market Product Penetration Expansion Geographic Diversification Acquisition Criteria Target Characteristics Expand Underserved Markets Market Adjacent Attractive Organizat
Slide 79: Go-forward strategy positions us to deliver growth, profitability, and strong returns through FY27
S T R O N G G O - F O R WA R D PAT H Go-forward strategy positions us to deliver growth, profitability, and strong returns through FY27 Adjusted EBITDA Adjusted EPS FOCF as % of Adj. Adjusted ROIC Organic Sales Margin Net Income 4 – 6% 20 – 23% 20 – 25% >100% 12 – 14% CAGR1 Target1 CAGR1 Target1 Tar
Slide 80: A compelling investment opportunity
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT A compelling investment opportunity Sustainable • Deep customer insight and application expertise in core markets Competitive • Materials Science and engineering expertise Advantages • Advanced product development and innovative produc
Slide 81: Q&A
Q&A EK xennamera
Slide 82: Closing Remarks
Closing Remarks Christopher Rossi President & CEO 82
Slide 83: A compelling investment opportunity
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT A compelling investment opportunity Sustainable • Deep customer insight and application expertise in core markets Competitive • Materials Science and engineering expertise Advantages • Advanced product development and innovative produc
Slide 84: KE <cennamerat
KE <cennamerat
Slide 85: Appendix
Appendix 85
Slide 86: Key Facts and Assumptions
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Key Facts and Assumptions MEDIUM-TERM TARGETS CONSIDER THE FOLLOWING ASSUMPTIONS ~2% Neutral Adjusted Effective Price realization Foreign exchange Tax Rate + Inflationary environment returns to historical levels ~25% Capital + Pricing
Slide 87: Non-GAAP Reconciliations
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Non-GAAP Reconciliations The information presented by the Company contains certain non-GAAP financial measures. Kennametal management believes that presentation of these non-GAAP financial measures provides useful information about the
Slide 88: Non-GAAP Reconciliations (cont.)
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Non-GAAP Reconciliations (cont.) Free Operating Cash Flow FOCF is a non-GAAP financial measure and is defined by the Company as cash provided by operations (which is the most directly comparable GAAP measure) less capital expenditures,
Slide 89: Non-GAAP Reconciliations (cont.)
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Non-GAAP Reconciliations (cont.) Three Months Ended Organic Sales Growth - Metal Cutting 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Organic sales growth 10 % 10 % 11 % 9% 7% 5% 7% 19 % 3
Slide 90: Non-GAAP Reconciliations (cont.)
T R A N S F O R M I N G H O W E V E RY D AY L I F E I S B U I LT Non-GAAP Reconciliations (cont.) Adjusted Net Income Attributable to Kennametal Year ended June 30, (in millions) 2023 2022 2021 Net income attributable to Kennametal, reported $ 118.5 $ 144.6 $ 54.4 Adjustments: Restructuring and rela