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Good morning. I would like to welcome everyone to Kennametal's Second Quarter and Fiscal 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations.

Thank you, operator. Welcome, everyone, and thank you for joining us to review Kennametal's Second Quarter Fiscal 2026 results. This morning, we issued our earnings press release and posted our presentation slides on our website. We will be referring to that slide deck throughout today's call. I'm Michael Pici, Vice President of Investor Relations. Joining me on the call today are Sanjay Chowbey, President and Chief Executive Officer; and Pat Watson, Vice President and Chief Financial Officer. After Sanjay and Pat's prepared remarks, we will open the line for questions. At this time, I'd like to direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that constitute forward-looking statements and as such, involve a number of assumptions, risks and uncertainties that could cause the company's actual results, performance or achievements to differ materially from those expressed in or implied by such statements. These risk factors and uncertainties are detailed in Kennametal's SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliation to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and on our Form 8-K on our website. And with that, I'll turn the call over to Sanjay.

Thank you, Mike. Good morning, and thank you for joining us. I will begin the call today with an overview of the quarter, including end market commentary, followed by a spotlight on one of our growth focus areas, Power Generation. From there, Pat will cover the quarterly financial results as well as the fiscal year '26 outlook. Finally, I'll make some summary comments and open the line for questions. Turning to Slide 3. Let me begin by addressing some of the highlights from our strong second quarter. Our global commercial teams continue to advance our strategic growth initiatives. In the quarter, the Infrastructure team secured significant mining orders in Earthworks from key distributors in Asia Pacific and EMEA. Both wins were a direct result of our team's efforts with those customers to deliver high-quality technical support and superior product performance. In Metal Cutting, we won projects that continue to advance our growth focus on Aerospace and Defense. We also secured engine and transmission wins in Transportation. In General Engineering, we increased our share with a pump manufacturer by providing them an innovative solution for machining valve seats. As you know, we have and will continue to prioritize above-market growth. In the quarter, we also implemented pricing actions in response to rising tungsten costs, which are at historically high levels. We remain confident in our ability to price for the rising tungsten costs and in our ability to offset the impact. On the cost improvement front, we realized $8 million in restructuring savings this quarter and continue to execute our plan to lower structural costs and consolidate manufacturing operations. Some of these plans will extend beyond this fiscal year into fiscal '27. And as a result, we have updated the impact in fiscal '26, which Pat will address when he provides our updated outlook. Now let's move to our quarterly results, which again exceeded the sales and EPS outlook we provided last quarter. Compared to the outlook, sales were better than expected on higher sales volume, which included the stronger-than-anticipated effect of customers buying ahead of price increases and modest improvement in certain end markets. EPS benefited from the volume and a lower-than-anticipated tax rate. Year-over-year, sales increased 10% organically. That's our second consecutive quarter of organic growth and reflects price realization, buy ahead and continued modest relief from the broad market weakness. Excluding the effects of the buy ahead, sales volumes were modestly positive in the quarter, reflecting a continuation of gradual volume improvement we have seen since the fourth quarter of fiscal '25. In terms of profitability, adjusted EBITDA margin was 17.1% compared to 13.9% in the prior year quarter. And adjusted EPS increased to $0.47 compared to $0.25 in the prior year quarter. The improvement in our profitability reflects the benefits from our strategic growth and restructuring initiatives as well as price/raw timing effects from the unprecedented increase in tungsten prices. As a result, today, we are raising [Audio Gap] outlook shortly. In summary, we are pleased with this quarter's results and we continue to focus on delivering our commitments throughout fiscal '26. Turning to Slide 4 in our end market update. The top half of this slide shows our outlook at the midpoint and includes impact of price growth initiatives and market factors. I will focus on the bottom half of the slide and address the 3 markets that have changed since our last call: Transportation, Aerospace and Defense and General Engineering. First, IHS estimates for Transportation slightly improved from the previous estimate of down low single digits to flat. Production volumes in Asia Pacific improved; in EMEA, the current forecast is a bit better, but still down; and the Americas declined slightly. Secondly, for Aerospace and Defense. The aerospace industry continues to show growth and OEM build rates continue to improve. Finally, in General Engineering, the IPI forecast in the Americas improved slightly while other regions remain essentially unchanged. Also the most recent GBI and ISM PMI surveys indicate expansion in the U.S. for the first time in almost a year. For our other end markets, conditions remain mostly unchanged from our previous forecast. Turning now to Slide 5. I want to take some time to expand upon an opportunity we introduced last quarter: the rising global demand for electricity and what it means for Kennametal. Across the growing energy value chain, Kennametal has a broad range of products that help our customers run faster and longer from resource extraction through energy transmission, generation and use. Electricity demand is projected to grow at about 3% annually through 2030 fueled by the rapid expansion of AI data centers, electric vehicle adoption and continued grid build-out. Data centers alone could represent 17% of U.S. power demand by 2030 along with EVs and hybrids, growing at a strong double-digit CAGRs in the Americas from 2023 to 2027. And as demand rises, the energy mix is diversifying. By 2030, incremental energy supply is expected to come from 45% natural gas, 35% solar and 20% wind plus coal is expected to remain a meaningful source as overall demand for electricity persists. The grid is also scaling quickly with U.S. high-power transmission lines forecasted to grow at a 20% CAGR through 2030. This source to generation opportunity represented approximately 17% of our fiscal '25 sales. We anticipate this market to grow low single digits through 2030. Some areas like gas and combustion turbines are anticipated to experience relatively higher growth over this time frame. In our Infrastructure segment, our wear resistant solutions are used in oil and gas extraction as well as trenching and foundation digging for wind turbines and transmission lines. In Metal Cutting, we supply products and solutions used in gas turbines and combustion engines supporting both utility and AI data center power generation. Gas turbines are projected to grow at 15% CAGR and combustion engines for backup generators at 10% CAGR. We are well positioned to capitalize on these trends with the right products already in our portfolio and access to the right customers. And among those customers, we are well known for quality, reliability and innovation and we offer a global footprint that supports them [ wherever ] who will review the second quarter financial performance and the outlook.

Thank you, Sanjay, and good morning, everyone. I will begin on Slide 6 with a review of the second quarter operating results. Sales were up 10% year-over-year, with an organic increase of 10% and a favorable foreign currency exchange of 1%. The divestiture we concluded last year also had a negative 1% effect. At the segment level, Infrastructure increased 11% organically and Metal Cutting increased 9%. On a constant currency basis, Americas sales increased 16%, Asia Pacific sales increased 9% and EMEA was up 2%. As Sanjay mentioned, our sales performance this quarter exceeded our expectations. Relative to those expectations, higher sales volumes, including the effect of customers buying ahead of tungsten related price increases with a catalyst for the outperformance. By the end market, on a constant currency basis, Aerospace and Defense grew 23%, Earthworks grew 18%. General engineering grew 8%; Energy increased 4% and Transportation increased 3%. I'll provide more color when reviewing the segment performance in a moment. Adjusted EBITDA and operating margins were 17.1% and 10.5%, respectively, versus 13.9% and 6.9% in the prior year quarter. The margin increase was driven by favorable price/raw effect of $17 million within the Infrastructure segment, higher pricing and tariff surcharges in Metal Cutting, increased sales and production volumes in Metal Cutting, and year-over-year restructuring savings of $8 million. These were partially offset by higher compensation costs, tariffs and general inflation and a prior year benefit from insurance proceeds of approximately $3 million that did not repeat in the current year. Adjusted earnings per share were $0.47 in the quarter versus $0.25 in the prior year period. The main drivers of our EPS performance are highlighted on the bridge on Slide 7. The year-over-year effect of operations this quarter was $0.22. This reflects [Audio Gap] approximately $0.15 of favorability from price/raw material cost timing, price and tariff surcharges and higher sales and production volume in Metal Cutting and incremental restructuring benefits. These were partially offset by higher compensation costs, tariffs and general inflation. There was a headwind of $0.02 related to the net insurance proceeds received in the prior year due to the tornado that damaged our Rogers facility. You can also see $0.02 of transaction gains related to preferential Bolivia exchange rates. Currency and pension impacts offset each other. Slides 8 and 9 detail the performance of our segments this quarter. Reported Metal Cutting sales were up 11% compared to the prior year quarter, with 9% organic growth and favorable foreign exchange of 2%. Regionally, excluding currency exchange, the Americas increased 15%, Asia Pacific increased 9% and EMEA increased 3%. Looking at sales by end market. Aerospace and Defense increased 19% year-over-year due to the absence of the Boeing strike that occurred in the prior year, improved build rates in the Americas and easing supply chain pressures in EMEA, combined with our global strategic focus. Energy grew 11% this quarter due to data center power generation wins. General Engineering increased 9% year-over-year due to indirect channel buy ahead and price; and lastly, Transportation increased 3% year-over-year due to internal combustion engine and transmission wins in the Americas and price. Across all end markets, there was approximately $10 million of sales in the quarter as a result of customers buying ahead of price increases. Regionally, approximately half of the buy ahead was in the Americas with 1/3 in Asia Pacific and the balance in EMEA. Metal Cutting adjusted operating margin of 9.6% increased 360 basis points year-over-year, primarily due to price and tariff surcharges, higher sales and production volumes and incremental year-over-year restructuring savings of approximately $6 million. These factors were partially offset by higher compensation, tariffs and general inflation. Turning to Slide 9 for Infrastructure. Reported Infrastructure sales increased 8% year-over-year with an organic growth of 11% and favorable foreign currency exchange of 1%, partially offset by a divestiture impact of 4%. Regionally, on a constant currency basis, Americas sales increased 17%, Asia Pacific increased 8% and EMEA sales decreased by 1%. Looking at sales by end market on a constant currency basis, Aerospace and Defense increased 33% due to defense orders driven by continued focus on growth initiatives in the Americas. Earthworks increased 18% due to mining share gain and higher global construction volumes due to buy ahead and share gain. General Engineering increased 5% due to price and higher powder demand in the Americas and Asia Pacific partially offset by lower demand in EMEA. And lastly, Energy was flat as higher prices offset weaker market conditions. Within Infrastructure, we saw approximately $3 million of sales as a result of customers buying ahead of higher prices. Adjusted operating margin increased 370 basis points year-over-year to 12.3% primarily due to a few factors. The increase in operating income was primarily due to the $17 million effect from a favorable timing of pricing compared to raw material costs and year-over-year restructuring savings of $2 million partially offset by higher compensation costs, prior year net insurance proceeds of $3 million and general inflation. Now turning to Slide 10 to review our free operating cash flow and balance sheet. Our second quarter year-to-date net cash flow from operating activities was $73 million compared to $101 million in the prior year period. Our second quarter year-to-date free operating cash flow decreased to $38 million from $57 million in the prior year due primarily to working capital changes, including the increase in inventory from higher tungsten prices partially offset by lower capital expenditures. On a dollar basis, year-over-year, primary working capital increased $97 million from an $85 million increase in inventory to $690 million. On a percentage of sales basis, primary working capital increased to 31.9%. Net capital expenditures decreased to $34 million compared to $44 million in the prior year. We returned $15 million to our shareholders through dividends. Due to the unprecedented increase in level of tungsten prices and the corresponding increase in our working capital, we did not repurchase shares in the second quarter. Inception to date, we have repurchased $70 million or 3 million shares under our $200 million authorization. And as we've had every quarter since becoming a public company over 50 years ago, we paid a dividend to our shareholders. We remain committed to returning cash to shareholders while executing our strategy to drive growth and margin improvement. We continue to maintain a healthy balance sheet and debt maturity profile with no near-term refunding requirements. During the quarter, we amended and extended our revolving credit agreement, which has capacity of $650 million and matures in November 2030. At quarter end, we had combined cash and revolver availability of approximately $779 million, and we're well within our financial covenants. The full balance sheet can be found on Slide 17 in the appendix. Now on Slide 11 regarding the full year outlook. We now expect FY '26 sales to be between $2.19 billion and $2.25 billion, with volume ranging from flat to positive 3%. Net price and tariff surcharge combined of approximately 11% and we anticipate an approximate 2% tailwind from foreign exchange. The increased outlook reflects additional pricing actions related to the increase in cost of tungsten since we provided our prior outlook. Despite the record level of tungsten, we remain confident in our ability to achieve the price. From a cost perspective, as Sanjay noted earlier, some of our EMEA restructuring actions will take a bit longer to execute. And as a result, our updated range includes $30 million of savings. Depreciation and amortization, foreign exchange and pension assumptions are unchanged and noted on the slide. We now expect adjusted EPS in the range of $2.05 to $2.45. This outlook includes approximately a $0.95 year-over-year benefit related to the timing of price and raw material costs. On the cash side, the full year outlook for capital expenditures is unchanged and free operating cash flow is expected to be approximately 60% of adjusted net income. This revision reflects the additional working capital required by the rising cost of tungsten as discussed earlier. Turning to Slide 12 regarding our third quarter outlook. We expect third quarter sales to be between $545 million and $565 million, which reflects the effects of the buy ahead that occurred in the second quarter. We expect volumes to range from negative 4% to flat. If you were to adjust for the buy ahead that occurred in the second quarter, volume at the midpoint would be positive 1% and would be the third consecutive quarter of improving volume trends. The outlook also includes price and tariff surcharge realization of approximately 13% and 5% positive impact from foreign exchange. We expect adjusted EPS in the range of $0.50 to $0.60. This includes approximately $0.30 year-over-year benefit related to price/raw timing. It's worth noting that the prior year's third quarter results included a $0.13 benefit from the advanced manufacturing tax credit. The other key assumptions for the quarter are noted on the slide. And with that, I'll turn it back over to Sanjay.

Thank you, Pat. Turning to Slide 13. Let me take a few minutes to summarize. We delivered a solid first half of fiscal '26 driven by price, modest improvements in a couple of end markets, project wins on the commercial side and cost improvement actions. We continue to make steady progress on our strategic growth initiatives, lean transformation and structural cost improvement while also exploring ways to strengthen our portfolio over time. We remain confident in our plan for long-term value creation for our shareholders. And with that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from Stephen Volkmann with Jefferies.

I guess, no surprise, maybe I'll talk about tungsten a little bit here. So a couple of things. You talked about some pull forward here into the last quarter, is there some big price increase that's about to hit that people wanted to get in front of?

Yes, Steve, we had a modest price increase in January 1 relative to what we have done in past, I think it's in mid-single digits.

I'd add to that, Steve, I think, even in places where we're not on a list price business, and we've got a lot more material content. We've got customers who are informed about the direction of what the tungsten price is.

Okay. And since the price of Tungsten is up, I think, since you started this conference call, that's only a slight joke. It is up 33% year-to-date, right? So how do you -- like how fast can you kind of keep up with this?

Yes. So Steve, there are parts of our business where the prices get effective very quickly. Those are like -- the spot buy. And also we have parts of the business which are indexed to the prices. And of course, in Metal Cutting, pretty much everything is on the list price basis. So that takes a little bit more time. But based on the order pattern and the lead time, that also works out just fine for us. As you asked the first question, I made the comment modest because prices of tungsten has gone up a lot more than almost 2 to 3x. But by the time you look at how it affects overall in the price of our product, and I mentioned, yes, mid-single digit is relatively higher price. But our customers also see these dynamics, and they have been also kind of monitoring it very closely. And there were some buy ahead, as Pat mentioned in his prepared remarks. If you even adjust for that, we still think that the overall market improved sequentially, and then we're still expecting slight improvement in market from that perspective.

Okay. All right. Great. And then just the final piece here. How should we think about the supply side? I'm curious, like, are you worried about access to tungsten. Is there any chance that the market gets tight and you kind of can't get what you need. And maybe as you answer that, Sanjay, just remind us about sort of your kind of internal versus external sourcing of tungsten and I'll pass it on.

Yes, sure. I will also have Pat chime in here, but let me start by saying that we have multiple different sources, and we have things in pipeline in terms of how we work with our vendors and suppliers. We have -- in many cases, we have long-term agreements. So we feel confident in our ability to get what we need for the outlook that we're giving you at this point. Pat?

Yes, I'd say obviously, in terms of sources, we use a diversified mix of recycled materials. We've got our facility in Bolivia that pulls out material from that market. And in terms of what we're using, I'll say, outside of China, we do not have a dependence on Chinese material to satisfy those operations. Obviously, with the ramp-up of tungsten, and as we've commented before, this is really a supply-driven price increase at the moment across the industry. We are seeing additional activity, I would say, in terms of what's happening at mines and projects also in terms of government involvement in some of those things to facilitate that. And so I think if we took a longer-term view of this as well, there's ample supply that's out there that should come online.

Yes. Steve, I'll add one more thing. Along with the supply side of the question, we, as a company based on material science and technology, we also look for ways that how we use tungsten in the most efficient way in our product. There are places where over the years, we have taken parts of our product mixed with the steel and then having the parts of the tool made by tungsten. So we are also looking for as there are some pricing concerns and also the supply side concerns, how do we make our product more efficient in that result.

Our next question comes from Julian Mitchell with Barclays.

I just wanted to start off with clarifying your -- the volume trends just kind of through the year. So I guess you have the third quarter guidance of slight volumes down year-on-year at the midpoint. The full year is slight growth. So maybe help us understand or remind us kind of Q1, Q2, how are volumes moving then and trying to understand kind of that interplay of maybe some pull forward of volume versus what you're seeing in the end market final demand volume-wise.

Sure, Julian. First, let me back up a little bit from your question of the full year, and then I'll come to Q2 and Q3 in a second. If you go back to the August outlook, at midpoint, we have said volume was going to be minus 2.5%. Last quarter, we said at midpoint, volume was going to be for the full year again at plus 1%. This time, we are saying volume is 1.5%. So it gives you at least confidence that volume is moving in the right direction as the year has progressed. Of course, we have -- like that's the 400 basis point change in 6 months in our volume projection for the full year. In parallel, of course, we have 700 basis point change in the price, which is a bigger driver of top line. But coming back to Q2 and Q3 dynamics. In Q2, we had a buy ahead, as Pat alluded to that earlier, about $13 million by the time you add both segments. Now if you adjust for that, Q2 will be flat. And then if you adjust for that also Q3, rather than showing as negative, it will be plus 1. So we are showing you also Q1 was minus 1. Q2 was plus in a flat and then Q3 getting plus 1. So volume overall is moving forward in the right direction for us.

That's really helpful. And maybe just my follow-up. If we focus on, I suppose, 2 markets in particular that are very relevant for you, General Engineering and then Transportation. So Transportation, I suppose, has been pretty soggy updates on auto production ex China, General Engineering, I think, understandably people getting excited because of the manufacturing PMI move a couple of days ago. Just give us sort of your perspective on those 2 markets. And again, the volume demand picture, please. I know you've guided the sales assumptions on Slide 11.

Yes, sure. So let me start with Transportation first, then I'll come to General Engineering. In Transportation, as we had in our prepared remarks that EMEA improved slightly, still in negative territory in low single-digit territory. Asia Pacific improved, this is again data coming out of the IHS. That has had quite a bit of improvement, almost 200 basis points. Americas is essentially flat, slightly negative, but essentially flat in terms of Transportation. So overall, what we said was that Transportation was minus 1 last time, now it's about flat. For us, again, this is just the market. For us, of course, we are winning projects, and we have also seen some comp issues with projects that we had in EV a couple of years ago, in last 24 months, where we've got good stocking orders and all that. That has some other dynamics going on. As you know, some of the programs have not taken off as much. So overall, we expect Transportation to help us with this slight improvement in the trend. Now coming to General Engineering. As said in the prepared remarks, Americas is where we have seen tangible difference. Other areas like EMEA and also in APAC, essentially flattish or similar outlook that we had before. In the recent outlook, I think the PMI -- ISM PMI report that came out earlier this week, we saw that it was above 50 for the first time in 12 months. So that's a good sign, but there's just 1 month. We got to see that translate into -- that sentiment translate into real orders. And hopefully, that happens. So that can give us a little bit of upside. But in our view, right now, we have assumed slight improvement in Americas and essentially flattish for other 2 regions.

Our next question comes from Steven Fisher with UBS.

So just to talk about the cadence a little bit more. Thanks for giving that adjusted progression on the volumes adjusting for the pull forward. I guess just looking at what's implied in Q4, it seems like a lot of the year's upside is really falling into Q4. Can you just talk a little bit about what is driving such a big uplift in Q4 and then, I guess, related to that, how should we think about carryover into the second half of this calendar year, both from a kind of a price and volume and price cost perspective?

Yes. A couple of things, just to kind of walk you through there, Steve. The way I look at the progression here in terms of the second half, and if I strip away a couple of elements here and that is we obviously had some [ track ] between Q2 and Q3 on some buy ahead. And then if we think about the incremental price that's going into the business here in the back half, you pull that out at the midpoint look pretty normal from a sequential volume perspective. As you think about that change then, which is pretty significant Q3 to Q4, what's driving that pretty significant step up in terms of where pricing is. And that's just a dynamic that's associated with the timing of when we've seen tungsten prices rise here. In the month of January alone, tungsten was up nearly $340, right? And so much of that will hit us then in fourth quarter. And then as you think about in your question in terms of what's the first half of our fiscal '27 kind of look like, yes, where we're kind of sitting now, you would anticipate right, some bleed over into early part of FY '27 in terms of favorability of price/raw. Obviously, as we talked about in the scripted remarks, there's a headwind out there as well at some point in time once tungsten stabilizes, this will have the absence of some of this benefit, but when that happens, obviously uncertain at the moment. The other two things I would think about in terms of that early part of '27 and beyond that price/raw dynamic coming into play. Just keep in mind that there's additional restructuring that will be coming in place that ultimately will get us to a run rate of about $125 million at the end of next fiscal year. That's a 35 -- excuse me, a $30 million lift, and then additionally, here, as we think about FY '26, there's a little bit more than your average performance-based compensation in play. And that -- when you think about '27, that's probably a $0.10 to $0.15 tailwind then at this point in time going into '27.

That's really helpful. And then, I guess, nice to see that you continue to have some of these wins from your customers. Can you just talk about the competitive dynamics on that? How actively or how broad is the competitor set on these? Or is the pie just getting bigger and these are areas that you're not facing a lot of competition?

Yes. Of course, we are facing competition in all areas, but I will just tell you that we are using our core competencies as we have spoken before, with material science, our products and solutions, and also adding that with application engineering support, which is, again, a lot of talent we have in the field, in the front line and our engineering team. And then our global footprint that helps us meeting customer demands anywhere in the world, I think we are using our core competencies and a very structured approach on our growth initiatives to drive very close intimacy with customers and solving their problems and winning these projects. I can tell you a few things that we have spoken and past, but you look through the different end markets we play. In Aerospace and Defense, we have been definitely winning bigger share of wallet with our major customers. And also, we have expanded our new customer list in that in the last few years. Similarly, in Earthworks, we talked about mining project wins and all that. We definitely have had some new products coming out there and also supporting our customers with good operational performance and quality and delivery. Now I have to say that Earthworks, some of the wins we have has been price sensitive as we have noted in the past. So we know that, that pressure will be there on us even going forward. With respect to Energy, we have talked about oil and gas customers are definitely valuing our products as they are going more -- not necessarily increasing rig counts, but going more distance in the horizontal ways. We have very good products there. Along with that, in Energy, we have had very good success with supporting our customers on the power generation for AI data centers. We highlighted that last quarter or so. Today, we talked about the broader electricity and energy play and how we are well positioned to capture that at least to outperform the market. Transportation, we are very well prepared regardless of whichever way our end customers go with respect to drive trend. We had very proven products in combustion engines. Then we launched a lot of really good products on battery and hybrid. Of course, there's quite a bit of dynamics in the mix right now, but we are well positioned to support our customers in that. And finally, coming to General Engineering. We have very strong channel partners. We work very closely with them. Along with that, in parallel, we have launched many initiatives in General Engineering to help our smaller customers, small- to medium-sized customers. In parallel, we have also launched new initiatives on digital machining solutions. We have put in public domain, our partnerships with key technology players out there. So we're taking a very comprehensive approach as it applies to our overall market.

Our next question comes from Steve Barger with KeyBanc.

This is actually Christian

Yes. On the volume, as we have said before, Metal Cutting is going to have a little bit higher incremental leverage than Infrastructure. But net-net, we have said mid-40s as average. Pat, do you want to add something to that?

No, I just only say that's a through-the-cycle type number as well. And so individual quarters depending on where a variety of factors that could move around a little bit.

Yes. With respect to price, obviously, we have said it, our first intent there is to make sure that we are offsetting the cost. So the mid-40s number is on volume.

Got it. Understood. And then I guess second question, just your full year guide assumes tungsten prices remain stable from the current level. How fast your list prices adjust in Metal Cutting if tungsten keeps rising? And I guess, conversely, if tungsten prices fall at some point, would you have to give back the surcharges and reduce your list price? And how fast does that happen?

Yes. So we generally have about 3 months or so lag in Metal Cutting in terms of list price change. With respect to if the prices come down, our goal is to stay competitive in the market. So we'll see when that happens and what the extent of that is.

Our next question comes from Angel Castillo with Morgan Stanley.

Just maybe a near-term one first. I wanted to clarify, I don't know if -- apologies if I missed this, but did you say, I guess, how much orders are kind of rising in January, just what you're seeing kind of thus far in the last month and whether that kind of aligns with what you're talking about in terms of the organic growth or maybe even at or just kind of compare to that?

Sorry. We have not talked about January specifically in the prepared remarks, Angel, but I can just tell you that we have a good start, and we are confident about the outlook we gave you.

Understood. And then, Sanjay, just a little bit of a bigger picture question. Back in, I think, fiscal 4Q, you had talked about some additional self-help initiatives, plant closures and other kind of changes you are making given how challenging the backdrop was and just the overall demand picture. But ever since that, I feel like things have been steadily improving, more tailwinds with Power Generation, just general kind of market share wins. Can you talk at a higher level? Is this -- do these changes impact how you're thinking about repositioning the business, the plant closures, what you need to target or what the business needs to focus on versus perhaps even areas of investing, so you can kind of take more advantage of those kind of higher, faster growth power gen type of markets, just bigger picture just how it impacts your strategy?

Yes, absolutely. Angel, first of all, let me recap what we have done, and then I'll talk about where we're going next. So in last 12 months, we have closed 2 manufacturing plants successfully. We divested 1 business. And now looking forward, we are working on projects as we've spoken after the Q4 of last year. We are going to, of course, keep an eye on where the market is and specifically to different product lines, the demands. And if we have to adjust our plan, we will, our overall goal here is to do what is best for our shareholders, our customers and our team. But at this point, the plans that we have put together still makes sense, and we are making good progress on that.

Our next question comes from Tami

Very nice results. A question on India. Could you remind us whether you have sourcing exposure from there? And how that might benefit should tariff rates on India come down in the coming months?

Yes, Tami, about 6 months ago or so when this question came up when the tariff had gone up, we have said that we don't really bring a lot of products from India to U.S. So for all practical purposes, the impact was minimum. And then whatever we had over the last few quarters globally, not just the India impact, but as overall we have taken appropriate actions, including relocating several thousand stock SKUs to different places of the world to offset that. So for all practical purposes, this change, tariff coming down will not have that impact. But I do believe that it should help India market, where we are a big player also in our -- so domestically, it should help us, but from a tariff perspective, it's not material for us.

Understood. Very helpful. And along the same lines, should some more trade deals come through, how should we think about pricing? Would tariff surcharges get automatically rolled back? Or you took permanent price increases, which might stick even if tariffs go down in the coming months, how should we think about that?

We have kept the tariffs as is right now. We have not converted that to a permanent price change, but we're keeping that option open. If there are some parts of the trade agreements that feel like more permanent, we'll do that. That is good for everybody, including our customers. But as of right now, we're keeping tariffs as tariff. And if the tariffs do come down, we will immediately adjust it down.

This concludes our question-and-answer session. I would like to turn the conference back to Sanjay Chowbey for closing remarks.

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