Large. Authorization. And as we have had every quarter since becoming a public company over fifty 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 a 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 are 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 2026 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 the 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 $2.50 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 a 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 PriceRock timing. It is 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 will 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 2026, 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.

Good morning, Steve.

Great.

Good morning, guys. Thank you for taking the question.

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

Yes, Steve. We had a modest price increase, you know, January 1, relative to what we have done in the past, think it is in mid-single digits.

I would add to that I think even in places where we are not on a list price business and we have got a lot more material content, we have 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 is only a slight joke. It is up 33% year to date. Right? So how do you like, how fast can you kinda keep up with this?

Yeah. So Steve, there are parts of our business where, you know, the prices get affected very quickly. Those are like the spot by. And also we have parts of business which are indexed to the prices. And of course, know, 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 have gone up a lot. More than almost, you know, two to three times. But by the time you look at how it affects overall, you know, price of our products, and I mentioned, yes, mid-single digit is relatively higher price. But, you know, our customers also see this dynamic. And they have been also kinda 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 that overall market improved sequentially and then we are still expecting slight improvement in market from that point. Oh. Perspective.

Okay. Alright. Great. And then just the final piece here. How should we think about the supply side? I am curious. Like, are you worried about access to tungsten? Is there any chance that, you know, the market gets tight and you kinda cannot get what you need? And maybe as you answer that, Sanjay, just remind us about sort of your tungsten? And I will pass it on. Thanks. kind of internal versus external sourcing of.

Yeah. Sure. I will also, you know, 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 are giving you at this point. Pat?

Yeah. I would say, you know, obviously, in terms of sources, we use a diversified mix of recycled materials. We have got our facility in Bolivia that pulls out material from that market. And, you know, in terms of what we are using, I will 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 have 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 is 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 is ample supply that is out there that will, you know, should come online.

Yes. Steve, I will add one more thing. Along with the supply side of the equation, 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, you know, mixed with the steel and then having the parts of the tool made by tungsten. We are also looking for as there are some pricing concerns, also the supply side concerns, how do we make our product more efficient in that regard?

Okay. Our next question comes from Julie Mitchell with Barclays. Please go ahead. Hi, good morning.

Hi, Julian.

I just want to start off with clarifying the volume trends just kind of through the year. 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 Q on Q2 how are volumes moving then? And to understand kind of that interplay of maybe some pull forward of volume versus what you are 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 will come to Q2 and Q3 in a second. If you go back to the August outlook, at midpoint, we had 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, you know, volume is one and half percent. So it gives you at least confidence that volume is moving in the right direction as the year has progressed. Of course, we have that is the 400 basis point change in six 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, will be plus one. So we are showing you also Q1 was minus one. Q2 was plus and flat and then Q3 getting plus one. So volume overall is moving forward in the direction for us.

That is really helpful. Thanks Andrew. And maybe just my follow-up. If we focus on, I suppose, two 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 perspectives on those two markets and again the volume demand picture, please. I know you have guided the sales assumptions on Slide 11.

Yes, sure. So let me start with transportation first, then I will 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 in almost 200 basis points. America is essentially flat, slightly negative, but essentially flat in terms of transportation. So overall, we said was that transportation was minus one last time. Now it is about flat. For us, again, is just the market. For us, of course, is we are winning projects and we have also seen some comp issues with projects that we had, you know, in EV a couple of years ago. In the last twenty-four months, you know, where we got good stocking orders and all that. That has, you know, 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, you know, 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 a similar outlook that we had before. In the recent outlook, I think the PMI, you know, ISM PMI report that came out earlier this week. We saw that was, you know, above 50 for the first time in twelve months. but So that is a good sign know, that is just one month. We got to see that translate into the sentiment, translate into real orders. And hopefully that happens. So that can give us a little bit upside. But in our view right now, we have assumed slight improvement in Americas and essentially flattish, you know, for other two regions.

That is very helpful. Thanks so much.

Our next question comes from Steven Fisher with UBS. Please go ahead. So just to talk about the cadence a little bit more. Thanks for giving that adjusted progression on the volumes adjusted for the pull forward. I guess just looking at what is 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?

Yeah. A couple of things, just to kinda walk you through there, Steve. The way I look at the progression here in terms of the second half and if I, you know, if I strip away a couple elements Here, and that is, you know, we obviously had some trends between Q2 and Q3. On some buy ahead. And then if we think about the incremental price that is 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 is driving that pretty significant step up in terms of where pricing is, you know, and that is just a dynamic that is associated with the timing of when we have seen tungsten prices rise here. 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 is the first half of our fiscal twenty twenty-seven kind of look like, yeah, where we are kinda sitting now, you would anticipate right, some bleed over into the early part of FY 2027 in terms of favorability of price raw. Obviously, as we talked about in the scripted remarks, there is 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, you know, when that happens, obviously, uncertain at the moment. The other two things I would think about in terms of that early part of 2027 and beyond that price raw dynamic coming into play, just keep in mind that there is additional restructuring that will be coming in place that ultimately will get us to a run rate about $125 million at the end of the next fiscal year. That is a 30 million lift. And then additionally, here as we think about FY, '26, there is a little bit more than your average performance-based compensation in play. In that, and we think about '27 that is probably a 10 to 15¢ tailwind then at this point in time going into FY 2027.

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

Yes. Of course, we are facing competition in all areas, but I will just tell you that, no, 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 in a lot of talent we have on the field in the frontline 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 very approach on our growth initiatives to drive very close intimacy with customers and solving their problems and winning this project. I can tell you in a few things that we have spoken in 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, you know, 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, you know, 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 as we have noted in past. So we know that pressure will be there on us even going forward. With respect to energy, we have talked about oil and gas customers definitely valuing our product. As they are going more, not necessarily increasing rig counts, but going more distance in 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, you know, quarter or so. Today, you know, we talked about the broader, you know, electricity and energy play and how we are well positioned to capture that, at least outperform the market. Transportation, we are very well prepared regardless of whichever way our end customers go with respect to drivetrain. We had very proven products in combustion engines. Then we launched a lot of really good products on battery and hybrid. Of course, there is quite a bit dynamic 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, know, 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 are taking a very comprehensive approach as it applies to our overall market.

Thank you very much.

Our next question comes from Steve Barger with KeyBanc. Please go ahead.

Hi, Steve.

Good morning, Sanjay Pett. It is actually Christian Zyla on for Steve Barger. Good morning. Hi.

First question, if you guys get both volume and price for several quarters, how should we think about incremental margins relative to history? Is there a range that you guys are targeting?

Yeah. On the volume, as we have said before, know, metal cutting is gonna have a little bit higher level, you know, incremental leverage than infrastructure. But net net, we have said mid-forties as the average. Pat, you want to add something to that?

No, just do not want to say that is a through the cycle type number as well. And so individual quarters, depending on where a variety of factors sit, that could move around a little bit.

Yes. With respect to price, obviously, have said it our first intent there is to make sure that we are offsetting the cost. So the mid-forties 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 do your list prices adjust in metal cutting if tungsten keeps rising? And then 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 three 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 will, you know, see when that happens and, you know, what the extent of that is.

Our next question comes from Angel Castillo with Morgan Stanley. Please go ahead. Just maybe a near-term one first. I wanted to clarify, do not 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 are seeing kind of thus far in the last month and whether that kind of aligns with what you are talking about in terms of organic growth or maybe even that or just kind of compares 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 were making given how challenging the backdrop was and just overall demand picture. But ever since that, I feel like things have been steadily improving, you know, 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 are 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 is how it impacts your strategy.

Yeah. Absolutely. Angel, first of all, let me recap what we have done and then, you know, I will talk about where, you know, we are going next. So in the last twelve months, we have closed two manufacturing plants successfully. We divested one business. And now looking forward, we are working on projects as we have spoken, you know, after the Q4 of last year. We are going to, of course, keep an eye on where the market is and the specific to, you know, different product line, 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 make sense and we are making good progress on that.

Our next question comes from Tami Zakaria with JPMorgan. Please go ahead. Hey, good morning. Very nice results. 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?

Yeah. Tami, about six months ago or so when this question came up, when the tariff had gone up, we had said that we do not really bring a lot of products from India to the US. You know, so for all practical purposes, the impact was minimum. And then whatever we had, you know, over the last, you know, few quarters, you know, globally, you know, not just the India impact, but as overall we have taken appropriate actions including relocating several thousand stock SKUs, you know, to different places of the world to offset that. So for all practical purposes, this change in tariff coming down will not have that impact. But I do believe that it should help India where we are a good big player also. In our own domestic market, it should help us. But from a tariff perspective, it is 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 are keeping that option open. If there are some parts of the trade agreements that feel like more permanent, we will do that. That is good for everybody including our customers. But as of right now, we are keeping tariffs as tariffs. 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 do not hesitate to reach out to Mike if you have any questions. Have a great day. Thank you.

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