Securities registered pursuant to Section 12(b) of the Act:

As of January 31,April 29, 2022 83,090,71082,638,419 shares of the Registrant’s Capital Stock, par value $1.25 per share, were outstanding.

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 Russia's invasion of Ukraine and the duration and spreadimposition of sanctions; 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, the success of preventative measures to contain or mitigate the spread of the virus and emerging variants, and the effectiveness, distribution and acceptance of COVID-19 vaccines;pandemic; other economic recession; our ability to achieve all anticipated benefits of restructuring, simplification and modernization initiatives; our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability;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.

ITEM 1.    FINANCIAL STATEMENTS

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

KENNAMETAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

KENNAMETAL INC.

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

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, 2021 (the “2021 Annual Report”). The condensed consolidated balance sheet as of June 30, 2021 was derived from the audited balance sheet included in our 2021 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 sixnine months ended DecemberMarch 31, 20212022 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 2022 is to the fiscal year ending June 30, 2022. 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.

4.     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 June 30, 2021, the fair values of our financial assets and financial liabilities are categorized as follows:

There have been no changes in classification and transfers between levels in the fair value hierarchy in the current period.

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 DecemberMarch 31, 20212022 and June 30, 2021. The fair value of derivatives not designated as hedging instruments in the condensed consolidated balance sheets are as follows:

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 income, net. (Gains) losses related to derivatives not designated as hedging instruments have been recognized as follows:

As of DecemberMarch 31, 20212022 and June 30, 2021, we had certain foreign currency-denominated intercompany loans payable with total aggregate principal amounts of €5.3 million and €5.2 million, respectively, designated as net investment hedges to hedge the foreign exchange exposure of our net investment in our Euro-based subsidiaries. A gainGains of $0.1 million and a loss of $0.8$1.5 million were recorded as a component of foreign currency translation adjustments in other comprehensive income for the three months ended DecemberMarch 31, 2022 and 2021, and 2020, respectively. A gainGains of $1.4$1.5 million and a loss of $1.4 millionan immaterial amount were recorded as a component of foreign currency translation adjustments in other comprehensive loss for the sixnine months ended DecemberMarch 31, 20212022 and 2020,2021, respectively.

As of DecemberMarch 31, 2021,2022, the foreign currency-denominated intercompany loans payable designated as net investment hedges consisted of:

6.    RESTRUCTURING AND RELATED CHARGES

In the September quarter of fiscal 2020, we announced the initiation of restructuring actions in Germany associated with our simplification/modernization initiative to reduce structural costs. Subsequently, we also announced the acceleration of our other structural cost reduction plans including the closure of the Johnson City, Tennessee facility. Expected pre-tax charges forAs of March 31, 2022, the FY21 Restructuring Actions are considered substantially complete. In line with our target of approximately $85 million. Totalmillion, total restructuring and related charges since inception of $81.8$84.8 million were recorded for this program through DecemberMarch 31, 2021,2022, consisting of: $74.1$77.1 million in Metal Cutting and $7.7 million in Infrastructure. The remaining charges related to the FY21 Restructuring Actions are expected to be within the Metal Cutting segment.

We recorded restructuring and related charges of $3.0 million for the three months ended March 31, 2022, which consisted of charges of $3.0 million in Metal Cutting and an immaterial amount in Infrastructure. Of this amount, restructuring charges were $0.9 million and restructuring-related charges were $2.1 million (included in cost of goods sold) for the three months ended March 31, 2022. For the three months ended March 31, 2021, we recorded restructuring and related charges of $2.1 million, which consisted of charges of $2.5 million in Metal Cutting offset by a benefit from the reversal of charges of $0.4 million in Infrastructure. Of this amount, restructuring benefits from the reversal of charges were $0.9 million of $1.7which $0.1 million was included in cost of goods sold for the three months ended DecemberMarch 31, 2021,2021. Restructuring-related charges of $3.0 million were recorded in cost of goods sold for the three months ended March 31, 2021.

We recorded restructuring and related charges of $2.6 million for the nine months ended March 31, 2022, which consisted of benefitscharges of $1.7$2.6 million in Metal Cutting and an immaterial amount in Infrastructure. Of this amount, restructuring benefits were $3.5$2.3 million and restructuring-related charges were $1.8$4.9 million (included in cost of goods sold) for the threenine months ended DecemberMarch 31, 2021.2022. For the threenine months ended DecemberMarch 31, 2020,2021, we recorded restructuring and related charges of $4.2$34.9 million, which consisted of charges of $3.5$32.0 million in Metal Cutting and $0.7 million in Infrastructure. Of this amount, restructuring charges totaled $1.8 million of which $0.4 million was included in cost of goods sold for the three months ended December 31, 2020. Restructuring-related charges of $2.4 million were recorded in cost of goods sold for the three months ended December 31, 2020.

As of DecemberMarch 31, 2021, $10.62022, $7.8 million and $4.5$3.6 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, 2021, $19.9 million and $9.9 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively. The amounts are as follows:

As of DecemberMarch 31, 20212022 and June 30, 2021, there was no unrecognized compensation cost related to options outstanding, and all options were fully vested as of DecemberMarch 31, 20212022 and 2020.2021.

The amount of cash received from the exercise of options during the sixnine months ended DecemberMarch 31, 20212022 and 20202021 was $0.2 million and $3.1$5.6 million, respectively. The total intrinsic value of options exercised was $0.1 million and $1.6$2.2 million during the sixnine months ended DecemberMarch 31, 20212022 and 2020,2021, respectively.

Changes in our performance vesting and time vesting restricted stock units for the sixnine months ended DecemberMarch 31, 20212022 were as follows:

During the sixnine months ended DecemberMarch 31, 20212022 and 2020,2021, compensation expense related to time vesting and performance vesting restricted stock units was $12.6$17.2 million and $12.3$18.7 million, respectively. Certain performance metrics were not met, resulting in an adjustment of 150,711 performance vesting stock units during the sixnine months ended DecemberMarch 31, 2021.2022. As of DecemberMarch 31, 2021,2022, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $32.2$28.1 million and is expected to be recognized over a weighted average period of 2.11.9 years.

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

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

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 income, net.

9.    INVENTORIES

We used the last-in, first-out (LIFO) method of valuing inventories for 38 percent and 39 percent of total inventories at DecemberMarch 31, 20212022 and June 30, 2021, 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.

11.    REVOLVING AND OTHER LINES OF CREDIT AND NOTES PAYABLE

During the three months ended September 30, 2020, we entered into the First Amendment (the Amendment) to the Fifth Amended and Restated Credit Agreement dated as of June 21, 2018 (as amended by the Amendment, the Credit Agreement). The Credit Agreement is a five-year, multi-currency, revolving credit facility that we use to augment our 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) LIBOR (or beginning January 1, 2022, a successor rate of Euro Interbank Offered Rate (EURIBOR), Sterling Overnight Index Average (SONIA), and Tokyo Interbank Offered Rate (TIBOR) for any borrowings in euros, pounds sterling and yen, 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 2023.

As of DecemberMarch 31, 2021,2022, we were in compliance with all the covenants of the Credit Agreement and we had $9.0$27.5 million of borrowings outstanding and $691.0$672.5 million of additional availability. There were no borrowings outstanding as of June 30, 2021.

12.     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 of our locations.

We establish and maintain accruals for certain potential environmental liabilities. At DecemberMarch 31, 2021,2022, the balance of these accruals was $14.6$12.9 million, of which $2.5$2.4 million was current. At June 30, 2021, the balance was $14.7 million, of which $2.6 million was current. These accruals represent anticipated costs associated with potential remedial requirements and are generally not discounted.

The accruals we have established for potential environmental liabilities represent our best current estimate of the costs of addressing all 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. Although our accruals currently appear to be sufficient to cover these potential environmental liabilities, there are uncertainties associated with environmental liabilities, and we can give no assurance that our estimate of any environmental liability will not increase or decrease in the future. 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 on these matters.

13.     INCOME TAXES

The effective income tax rates for the three months ended DecemberMarch 31, 2022 and 2021 and 2020 were 25.928.3 percent (provision on income) and 39.08.0 percent (benefit on income), respectively. The year-over-year change is due primarily due to the effects of changes in projected pre-tax income in the prior period, higher projected pre-taxpretax income in the current year, discrete tax benefits recorded in the prior year quarter related to a provision to return adjustment and the recognition of a stranded deferred tax balance in accumulated other comprehensive loss arising from valuation allowance adjustments and enacted tax rate changes associated with the termination of forward starting interest rate cash flow hedges, and geographical mix.

The effective income tax rates for the sixnine months ended DecemberMarch 31, 2022 and 2021 and 2020 were 26.527.2 percent (provision on income) and 93.384.6 percent (benefit on a loss)income), respectively. The year-over-year change is due primarily due to the effects of higher projected pre-taxpretax income in the current periodyear, discrete tax benefits recorded in the prior year related to a favorable provision to return adjustment and the recognition of a stranded deferred tax balance in accumulated other comprehensive loss arising from valuation allowance adjustments and enacted tax rate changes associated with the termination of forward starting interest rate cash flow hedges, and geographical mix.

As of DecemberMarch 31, 2021,2022, we have $25.5$25.2 million of U.S. net deferred tax assets, of which $57.0$56.0 million is related to net operating loss, tax credit, and other carryforwards that can be used to offset future U.S. taxable income. Certain of these carryforwards will expire if they are not used within a specified timeframe. At this time, we consider it more likely than not that we will have sufficient U.S. taxable income in the future that will allow us to realize these net deferred tax assets. However, it is possible that some or all of these tax attributes could ultimately expire unused, especially if our end markets do not continue to recover from the COVID-19 global pandemic. Therefore, if we are unable to generate sufficient U.S. taxable income from our operations, a valuation allowance to reduce the U.S. net deferred tax assets may be required, which would materially increase income tax expense in the period in which the valuation allowance is recorded.

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 duringwithin the current fiscal year.next six months.

14.    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.

15.    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 DecemberMarch 31, 20212022 and 20202021 is as follows: