Diluted earnings per share (“EPS”) of $1.94 and
Adjusted EPS of $1.92
Cabot Corporation (NYSE: CBT) today announced results for its
third quarter of fiscal year 2024.
Key Highlights
- Diluted EPS of $1.94 and Adjusted EPS of $1.92, which
represents a 35% increase in Adjusted EPS as compared to the same
quarter in the prior year
- Reinforcement Materials segment EBIT of $136 million; up 3%
year-over-year
- Performance Chemicals segment EBIT of $55 million; up 72%
compared to the same quarter in the prior year
- Cash Flows from Operations of $207 million in the third
fiscal quarter supported the return of $73 million of cash to
shareholders in the quarter
- Awarded platinum rating from EcoVadis for exceptional
leadership (top 1% of companies assessed) in sustainability
performance for the fourth consecutive year
(In millions, except per share
amounts)
Three Months Ended
Nine Months Ended
6/30/24
6/30/23
6/30/24
6/30/23
Net sales and other operating revenues
$
1,016
$
968
$
2,993
$
2,966
Net income (loss) attributable to Cabot
Corporation
$
109
$
82
$
243
$
211
Net earnings (loss) per share attributable
to Cabot Corporation
$
1.94
$
1.43
$
4.30
$
3.65
Less: Certain items after tax per
share
$
0.02
$
0.01
$
(0.95
)
$
(0.08
)
Adjusted EPS
$
1.92
$
1.42
$
5.25
$
3.73
Sean Keohane, Cabot President and Chief Executive Officer,
commented on the quarter, “I am very pleased that we were able to
deliver adjusted EPS of $1.92 in the third quarter, which
represents an increase of 35% over the prior year’s results. Our
strong third quarter financial results reflect the continued
strength of the Reinforcement Materials segment despite some
headwinds due to weather-related events, and a significant EBIT
step up in the Performance Chemicals segment driven by improved
volumes and product mix. In Performance Chemicals, it is
encouraging to see that demand in strategic high value applications
such as automotive and semiconductors rebounded to more normalized
levels after a very prolonged de-stocking period, and that our
products into strategic infrastructure applications continue to
build momentum.”
Keohane continued, “During the third quarter, we delivered
operating cash flow of $207 million and returned $73 million of
cash to our shareholders through $24 million in dividends and $49
million in share repurchases. Our balance sheet remains solid with
Net Debt to EBITDA at 1.2x and liquidity of $1.4 billion”.
Financial Detail
For the third quarter of fiscal 2024, net income attributable to
Cabot Corporation was $109 million ($1.94 per common share). Net
income reflects an after-tax per share income from certain items of
$0.02. Adjusted EPS for the third quarter of fiscal 2024 was $1.92
per share.
Segment Results
Reinforcement Materials – Third quarter fiscal 2024 EBIT
in Reinforcement Materials increased by $4 million compared to the
third quarter of fiscal 2023. The increase in EBIT was largely
driven by higher volumes in Europe and Asia Pacific and improved
pricing and product mix in our calendar year 2024 customer
agreements, partially offset by a less favorable geographic mix and
higher costs. Results in the quarter were also negatively impacted
by lower volumes in the Americas due to weather-related events.
Global and regional volume changes for Reinforcement Materials
for the third quarter of fiscal 2024 as compared to the same
quarter of the prior year are set forth in the table below:
Third Quarter Year-over-Year Change
Global Reinforcement Materials
Volumes
4%
Asia Pacific
9%
Europe, Middle East, Africa
9%
Americas
(4%)
Performance Chemicals – Third quarter fiscal 2024 EBIT in
Performance Chemicals increased by $23 million compared to the
third quarter of fiscal 2023 primarily due to a 9% increase in
volumes and a more favorable product mix. Higher volumes in our
specialty carbons and fumed metal oxides product lines were driven
primarily by improved sales into automotive, infrastructure, and
semiconductor applications.
Cash Performance – The Company ended the third
quarter of fiscal 2024 with a cash balance of $197 million. During
the third quarter of fiscal 2024, cash flows from operating
activities were a source of $207 million. Capital expenditures for
the third quarter of fiscal 2024 were $52 million. Additional uses
of cash during the third quarter included $24 million for the
payment of dividends and $49 million for share repurchases.
Taxes – During the third quarter of fiscal 2024, the
Company recorded a tax expense of $40 million with an effective tax
rate of 25%. This tax expense reflected a $3 million net benefit
for non-GAAP tax adjustments. The operating tax rate year-to-date
for fiscal 2024 was 28%. Our operating tax rate for fiscal 2024 is
expected to be in the range of 27% to 28%.
Outlook
Commenting on the outlook for the Company, Keohane said, “Given
the strong year-to-date results and our expectations for the fourth
fiscal quarter, we are raising our adjusted EPS guidance range for
fiscal 2024 to $7.00 to $7.10 from our previously communicated
range of $6.65 to $6.85. This updated guidance range reflects an
increase of $0.30 at the midpoint driven by our expectations for
improved results in the Performance Chemicals segment from higher
demand and a more favorable product mix as compared to the first
half of the year and continued strong results in the Reinforcement
Materials segment.
Keohane continued, “With one quarter to go in fiscal 2024, we
are on track to deliver greater than 30% year-over-year adjusted
EPS growth. Our strong cash flow and disciplined and balanced
approach to capital allocation has allowed us to invest in key
growth projects and return capital to shareholders. I believe Cabot
is executing well against our “Creating for Tomorrow” strategy and
our long-term targets to deliver attractive shareholder
returns. Our revised outlook for adjusted EPS in fiscal 2024
would place us at or above the high-end of our targeted range of 8%
to 12% adjusted EPS compound annual growth rate from fiscal 2021.
Also, we remain on track to deliver our target of more than $1
billion of cumulative discretionary free cash flow over the last
three fiscal years."
Investor Day
Cabot intends to host an investor day on December 4, 2024 in
Boston, Massachusetts to discuss the strategy, key growth
initiatives, sustainability leadership and the next set of
long-term financial targets for the company.
Earnings Call
The Company will host a conference call with industry analysts
at 8:00 a.m. Eastern time on Tuesday, August 6, 2024. The call can
be accessed through Cabot’s investor relations website at
http://investor.cabot-corp.com
About Cabot Corporation
Cabot Corporation (NYSE: CBT) is a global specialty chemicals
and performance materials company headquartered in Boston,
Massachusetts. The company is a leading provider of reinforcing
carbons, specialty carbons, battery materials, engineered elastomer
composites, inkjet colorants, masterbatches and conductive
compounds, fumed metal oxides and aerogel. For more information on
Cabot, please visit the company’s website at cabotcorp.com. The
Company regularly posts important information on its website and
encourages investors and potential investors to consult the Cabot
website regularly.
Forward-Looking Statements – This earnings release
contains forward-looking statements. All statements that address
expectations or projections about the future, including with
respect to our expectations for our performance in fiscal year
2024, including our expectations for adjusted earnings per share
for fiscal 2024 and the expected performance of our business
segments for the remainder of fiscal 2024, our expectations for
cumulative discretionary free cash flow and operating cash flow and
our uses of such cash, our expected performance against the
financial performance objectives we outlined at our Investor Day in
December 2021, and our expected operating tax rate for fiscal 2024
are forward-looking statements. These statements are not guarantees
of future performance and are subject to risks, uncertainties,
potentially inaccurate assumptions, and other factors, some of
which are beyond our control and difficult to predict. If known or
unknown risks materialize, or should underlying assumptions prove
inaccurate, our actual results could differ materially from past
results and from those expressed or implied by forward-looking
statements. Important factors that could cause our results to
differ materially from those expressed or implied in the
forward-looking statements include, but are not limited to,
industry capacity utilization and competition from other specialty
chemical companies; safety, health and environmental requirements
and related constraints imposed on our business; regulatory and
financial risks related to climate change developments; volatility
in the price and availability of energy and raw materials,
including with respect to the Russian invasion of Ukraine and the
U.S.-China trade relationship; a significant adverse change in a
customer relationship or the failure of a customer to perform its
obligations under agreements with us; failure to achieve growth
expectations from new products, applications and technology
developments; failure to realize benefits from acquisitions,
alliances, or joint ventures or achieve our portfolio management
objectives; unanticipated delays in, or increased cost of site
development projects; negative or uncertain worldwide or regional
economic conditions and market opportunities, including from trade
relations, global health matters or geo-political conflicts;
litigation or legal proceedings; interest rates, tax rates,
currency exchange controls and fluctuations in foreign currency
rates such as the recent currency movements in Argentina; and the
accuracy of the assumptions we used in establishing reserves for
our share of liability for respirator claims. These factors are
discussed more fully in the reports we file with the Securities and
Exchange Commission (“SEC”), particularly under the heading “Risk
Factors” in our annual report on Form 10-K for our fiscal year
ended September 30, 2023, which are filed with the SEC at
www.sec.gov. We assume no obligation to provide revisions to any
forward-looking statements should circumstances change, except as
otherwise required by securities and other applicable laws.
Use of Non-GAAP Financial Measures
To supplement Cabot’s consolidated financial statements
presented on a generally accepted accounting principle (“GAAP”)
basis, the preceding discussion of our results and the accompanying
financial tables report Adjusted EPS, Total Segment EBIT, Total
Segment EBITDA, Adjusted EBITDA, our operating tax rate, Free Cash
Flow and Discretionary Free Cash Flow, all of which are non-GAAP
financial measures. These non-GAAP financial measures are not
computed in accordance with, or as an alternative to, GAAP, and the
definitions of these measures may not be comparable to those used
by other companies. Reconciliations of Adjusted EPS to net income
(loss) per share attributable to Cabot Corporation, the most
directly comparable GAAP financial measure, Total Segment EBIT,
Total Segment EBITDA, and Adjusted EBITDA to Income (loss) from
operations before income taxes and equity in earnings of affiliated
companies, the most directly comparable GAAP financial measure of
each such non-GAAP measure, operating tax rate to effective tax
rate, the most directly comparable GAAP financial measure and Free
Cash Flow and Discretionary Free Cash Flow to Cash flow provided by
(used in) operating activities, the most directly comparable GAAP
financial measure, are provided in the tables titled “Cabot
Corporation Certain Items and Reconciliation of Adjusted EPS and
Operating Tax Rate” and “Cabot Corporation Reconciliation of
Non-GAAP Financial Measures.”
Management believes these non-GAAP measures provide investors
with greater transparency to the information used by Cabot
management in its financial and operational decision-making, allow
investors to see Cabot’s results through the eyes of management,
and better enable Cabot’s investors to understand Cabot’s operating
performance and financial condition.
Adjusted EPS. In calculating Adjusted EPS, we exclude
from our net income (loss) attributable to Cabot Corporation items
of expense and income that management does not consider
representative of the Company’s business operations. Accordingly,
reporting earnings on an adjusted basis supplements the GAAP
measure of performance and provides additional information related
to the underlying performance of the business. For example, certain
of the items we exclude are items that we are required by GAAP to
recognize in one period that relate to activities extending over
several periods or relate to single events that management
considers to be unusual and infrequent, although not necessarily
non-recurring. We refer to these items as “certain items.”
Management believes excluding these items facilitates operating
performance comparisons from period to period by eliminating
differences caused by the existence and timing of certain expense
and income items that would not otherwise be apparent on a GAAP
basis and evaluates the Company’s operating performance without the
impact of these costs or benefits. Management also uses Adjusted
EPS as a key measure in evaluating management performance for
incentive compensation purposes.
The items of income and expense that we exclude from our
calculations of Adjusted EPS but that are included in our GAAP net
income (loss) per share, as applicable in a particular reporting
period, include, but are not limited to, the following:
- Argentina controlled currency devaluation loss related to the
foreign exchange loss from government-controlled currency
devaluations on our net monetary assets denominated in the
Argentine peso and investment losses related to the utilization of
government bond programs established for the settlement of certain
foreign payables.
- Global restructuring activities, which include costs or
benefits associated with cost reduction initiatives or plant
closures and are primarily related to (i) employee termination
costs, (ii) asset impairment charges associated with restructuring
actions, (iii) costs to close facilities, including environmental
costs and contract termination penalties, and (iv) gains realized
on the sale of land or equipment associated with restructured
plants or locations.
- Legal and environmental reserves and matters, which consist of
costs or benefits for matters typically related to former
businesses or that are otherwise incurred outside of the ordinary
course of business.
- Acquisition and integration-related charges, which include
transaction costs, redundant costs incurred during the period of
integration, and costs associated with transitioning certain
management and business processes to Cabot’s processes.
- Asset impairment charges, which primarily include charges
associated with an impairment of goodwill, other long-lived assets
or assets held for sale.
- Charges related to the divestiture of our Purification
Solutions business, which include accelerated costs associated with
the change in control and employee incentive compensation.
- Benefit from the settlement of a royalty arrangement entered
into in connection with the divestiture of our former Specialty
Fluids business.
- Gains (losses) on sale of a business.
- Employee benefit plan settlements, which consist of either
charges or benefits associated with the termination of a pension
plan or the transfer of a pension plan to a multi-employer
plan.
- Gain associated with the bargain purchase of a business.
Cabot does not provide an expected GAAP EPS range or
reconciliation of the Adjusted EPS range with an expected GAAP EPS
range because, without unreasonable effort, we are unable to
predict with reasonable certainty the matters we would allocate to
“certain items,” including unusual gains and losses, costs
associated with future restructurings, acquisition-related expenses
and litigation outcomes. These items are uncertain, depend on
various factors, and could have a material impact on GAAP EPS in
future periods.
Total Segment EBIT. Total segment EBIT reflects the sum
of EBIT from our two reportable segments. In calculating Total
segment EBIT we exclude from our Income (loss) from operations
before income taxes and equity in earnings of affiliated companies,
certain items and items that, because they are not controlled by
the business segments and primarily benefit corporate objectives,
are not allocated to our business segments, such as interest
expense and other corporate costs, which include unallocated
corporate overhead expenses such as certain corporate salaries and
headquarter expenses, plus costs related to corporate projects and
initiatives.
Total Segment EBITDA. Total Segment EBITDA is equal to
Total Segment EBIT (as defined above), but further adjusted for
depreciation and amortization.
Adjusted EBITDA. Adjusted EBITDA reflects Total Segment
EBITDA and is further adjusted for unallocated corporate costs,
which include unallocated corporate overhead expenses such as
certain corporate salaries and headquarter expenses, plus costs
related to corporate projects and initiatives.
Free Cash Flow. To calculate “Free Cash Flow” we deduct
Additions to property, plant and equipment from cash flow provided
by (used in) operating activities.
Discretionary Free Cash Flow. To calculate “Discretionary
Free Cash Flow” we deduct sustaining and compliance capital
expenditures and changes in Net Working Capital from cash flow
provided by (used in) operating activities.
Operating Tax Rate. Our “operating tax rate” is
calculated based upon management's forecast of the annual operating
tax rate for the fiscal year applied to adjusted pre-tax earnings.
The operating tax rate excludes income tax (expense) benefit on
certain items, discrete tax items and, on a quarterly basis the
timing of losses in certain jurisdictions. The income tax (expense)
benefit on certain items is determined using the applicable rates
in the taxing jurisdictions in which the certain items occurred and
includes both current and deferred income tax (expense) benefit
based on the nature of the certain items. Discrete tax items
include, but are not limited to, changes in valuation allowance,
uncertain tax positions, and other tax items, such as the tax
impact of legislative changes and tax accruals on historic earnings
due to changes in indefinite reinvestment assertions. Management
believes that this non-GAAP financial measure is useful
supplemental information because it helps our investors compare our
tax rate year to year on a consistent basis and to understand what
our tax rate on current operations would be without the impact of
these items.
Cabot does not provide a forward-looking reconciliation of the
operating tax rate range with an effective tax rate range because,
without unreasonable effort, we are unable to predict with
reasonable certainty the matters we would allocate to “certain
items,” including unusual gains and losses, costs associated with
future restructurings, acquisition-related expenses and litigation
outcomes. These items are uncertain, depend on various factors, and
could have a material impact on the effective tax rate in future
periods.
Explanation of Terms Used
Product Mix. The term “product mix” refers to the mix of
types and grade of products sold or the mix of geographic regions
where products are sold, and the positive or negative impact this
has on the revenue or profitability of the business or segment.
Net Working Capital. The term “net working capital”
includes accounts receivable, inventory and accounts payable and
accrued expenses.
CABOT CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS Periods ended June 30
Three Months
Nine Months
Dollars in millions, except per share amounts (unaudited)
2024
2023
2024
2023
Net sales and other operating revenues
$
1,016
$
968
$
2,993
$
2,966
Cost of sales
760
745
2,273
2,352
Gross profit
256
223
720
614
Selling and administrative expenses
68
58
210
184
Research and technical expenses
16
15
46
43
Loss on sale of business
—
—
—
3
Income (loss) from operations
172
150
464
384
Other income (expense) Interest and dividend income
8
7
25
22
Interest expense
(19
)
(24
)
(62
)
(69
)
Other income (expense)
(3
)
(3
)
(33
)
(13
)
Total other income (expense)
(14
)
(20
)
(70
)
(60
)
Income (loss) from operations before income taxes and equity
in earnings of affiliated companies
158
130
394
324
(Provision) benefit for income taxes
(40
)
(41
)
(121
)
(90
)
Equity in earnings of affiliated companies, net of tax
2
1
5
4
Net income (loss)
120
90
278
238
Net income (loss) attributable to noncontrolling interests, net of
tax
11
8
35
27
Net income (loss) attributable to Cabot Corporation
$
109
$
82
$
243
$
211
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
1.94
$
1.43
$
4.30
$
3.65
Diluted weighted average common shares outstanding
55.7
56.5
55.8
56.7
CABOT CORPORATION SUMMARY RESULTS BY SEGMENT
Periods ended June 30
Three Months
Nine Months
Dollars in millions, except per share amounts (unaudited)
2024
2023
2024
2023
Sales Reinforcement Materials
$
649
$
624
$
1,966
$
1,939
Performance Chemicals
332
307
928
919
Segment sales
981
931
2,894
2,858
Unallocated and other (A)
35
37
99
108
Net sales and other operating revenues
$
1,016
$
968
$
2,993
$
2,966
Segment Earnings Before Interest and Taxes (B)
Reinforcement Materials
$
136
$
132
$
414
$
348
Performance Chemicals
55
32
120
89
Total Segment Earnings Before Interest and Taxes
191
164
534
437
Unallocated and Other Interest expense
(19
)
(24
)
(62
)
(69
)
Certain items (C)
(2
)
(1
)
(56
)
(7
)
Unallocated corporate costs
(16
)
(11
)
(51
)
(42
)
General unallocated income (expense) (D)
6
3
34
9
Less: Equity in earnings of affiliated companies, net of tax
2
1
5
4
Income (loss) from operations before income taxes and equity
in earnings of affiliated companies
158
130
394
324
(Provision) benefit for income taxes (including tax certain items)
(40
)
(41
)
(121
)
(90
)
Equity in earnings of affiliated companies, net of tax
2
1
5
4
Net income (loss)
120
90
278
238
Net income (loss) attributable to noncontrolling interests, net of
tax
11
8
35
27
Net income (loss) attributable to Cabot Corporation
$
109
$
82
$
243
$
211
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
1.94
$
1.43
$
4.30
$
3.65
Adjusted earnings (loss) per share (E)
$
1.92
$
1.42
$
5.25
$
3.73
Diluted weighted average common shares outstanding
55.7
56.5
55.8
56.7
(A) Unallocated and other reflects external shipping and handling
fees, royalties, the impact of unearned revenue, discounting
charges for certain Notes receivable, and other by-product revenue.
(B)
Segment EBIT is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess
segment performance and allocate resources. Segment EBIT includes
Equity in earnings of affiliated companies, net of tax, royalties,
Net income attributable to noncontrolling interests, net of tax,
and discounting charges for certain Notes receivable. (C)
Details of Certain items are presented in the Certain Items and
Reconciliation of Adjusted EPS and Operating Tax Rate table.
(D) General unallocated income (expense) consists of gains (losses)
arising from foreign currency transactions, net of other foreign
currency risk management activities, Interest and dividend income,
the profit or loss related to the corporate adjustment for unearned
revenue and unrealized holding gains (losses) for investments. This
does not include items of income or expense from the items that are
separately treated as Certain items. (E) Adjusted EPS is a
non-GAAP measure, and a reconciliation of Adjusted EPS to GAAP EPS
is presented in the Certain Items and Reconciliation of Adjusted
EPS and Operating Tax Rate table.
CABOT
CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30,
September 30,
Dollars in millions (unaudited)
2024
2023
Current assets: Cash and cash equivalents
$
197
$
238
Accounts and notes receivable, net of reserve for doubtful accounts
of $5 and $2
732
695
Inventories: Raw materials
145
148
Finished goods
341
374
Other
67
63
Total inventories
553
585
Prepaid expenses and other current assets
109
108
Total current assets
1,591
1,626
Property, plant and equipment
3,907
3,827
Accumulated Depreciation
(2,477
)
(2,415
)
Net property, plant and equipment
1,430
1,412
Goodwill
132
134
Equity affiliates
24
20
Intangible assets, net
55
60
Deferred income taxes
166
180
Other assets
182
172
Total assets
$
3,580
$
3,604
CABOT CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
June 30,
September 30,
Dollars in millions, except share and per share amounts (unaudited)
2024
2023
Current liabilities: Short-term borrowings
$
49
$
174
Accounts payable and accrued liabilities
626
600
Income taxes payable
34
40
Current portion of long-term debt
8
8
Total current liabilities
717
822
Long-term debt
1,083
1,094
Deferred income taxes
40
50
Other liabilities
244
231
Stockholders' equity: Preferred stock: Authorized: 2,000,000
shares of $1 par value Issued and Outstanding: None and none
—
—
Common stock: Authorized: 200,000,000 shares of $1 par value
Issued: 54,949,872 and 55,379,636 shares Outstanding: 54,816,803
and 55,243,804 shares
55
55
Less cost of 133,069 and 135,832 shares of common treasury stock
(3
)
(3
)
Additional paid-in capital
—
—
Retained earnings
1,676
1,574
Accumulated other comprehensive income (loss)
(382
)
(362
)
Total Cabot Corporation stockholders' equity
1,346
1,264
Noncontrolling interests
150
143
Total stockholders' equity
1,496
1,407
Total liabilities and stockholders' equity
$
3,580
$
3,604
CABOT CORPORATION QUARTERLY RESULTS BY SEGMENT
Fiscal 2023 Fiscal 2024 Dollars
in millions, except per share amounts (unaudited)
Dec. Q
Mar. Q
June Q
Sept. Q
FY
Dec. Q
Mar. Q
June Q
Sept. Q
FY
Sales Reinforcement Materials
$
643
$
672
$
624
$
624
$
2,563
$
641
$
676
$
649
$
―
$
1,966
Performance Chemicals
286
326
307
306
1,225
285
311
332
—
928
Segment sales
929
998
931
930
3,788
926
987
981
—
2,894
Unallocated and other (A)
36
35
37
35
143
32
32
35
—
99
Net sales and other operating revenues
$
965
$
1,033
$
968
$
965
$
3,931
$
958
$
1,019
$
1,016
$
―
$
2,993
Segment Earnings Before Interest and Taxes (B)
Reinforcement Materials
$
94
$
122
$
132
$
134
$
482
$
129
$
149
$
136
$
―
$
414
Performance Chemicals
29
28
32
36
125
34
31
55
—
120
Total Segment Earnings Before Interest and Taxes
123
150
164
170
607
163
180
191
—
534
Unallocated and Other Interest expense
(22
)
(23
)
(24
)
(21
)
(90
)
(22
)
(21
)
(19
)
—
(62
)
Certain items (C)
(4
)
(2
)
(1
)
(22
)
(29
)
(42
)
(12
)
(2
)
—
(56
)
Unallocated corporate costs
(15
)
(16
)
(11
)
(12
)
(54
)
(17
)
(18
)
(16
)
—
(51
)
General unallocated income (expense) (D)
4
2
3
13
22
13
15
6
—
34
Less: Equity in earnings of affiliated companies, net of tax
2
1
1
1
5
1
2
2
—
5
Income (loss) from operations before income taxes and
equity in earnings of affiliated companies
84
110
130
127
451
94
142
158
—
394
(Provision) benefit for income taxes (including tax certain items)
(20
)
(29
)
(41
)
118
28
(34
)
(47
)
(40
)
—
(121
)
Equity in earnings of affiliated companies, net of tax
2
1
1
1
5
1
2
2
—
5
Net income (loss)
66
82
90
246
484
61
97
120
—
278
Net income (loss) attributable to noncontrolling interests, net of
tax
12
7
8
12
39
11
13
11
—
35
Net income (loss) attributable to Cabot Corporation
$
54
$
75
$
82
$
234
$
445
$
50
$
84
$
109
$
―
$
243
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
$
0.88
$
1.49
$
1.94
$
—
$
4.30
Adjusted earnings (loss) per share (E)
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
$
1.56
$
1.78
$
1.92
$
—
$
5.25
Diluted weighted average common shares outstanding
56.7
56.8
56.5
56.1
56.5
55.8
55.8
55.7
—
55.8
(A) Unallocated and other reflects external shipping and handling
fees, royalties, the impact of unearned revenue, discounting
charges for certain Notes receivable, and other by-product revenue.
(B) Segment EBIT is a measure used by Cabot's Chief
Operating Decision-Maker to measure consolidated operating results,
assess segment performance and allocate resources. Segment EBIT
includes Equity in earnings of affiliated companies, net of tax,
royalties, Net income attributable to noncontrolling interests, net
of tax, and discounting charges for certain Notes receivable.
(C) Details of certain items are presented in the Certain
Items and Reconciliation of Adjusted EPS and Operating Tax Rate
table. (D) General unallocated income (expense) consists of
gains (losses) arising from foreign currency transactions, net of
other foreign currency risk management activities, Interest and
dividend income, the profit or loss related to the corporate
adjustment for unearned revenue and unrealized holding gains
(losses) for investments. This does not include items of income or
expense from the items that are separately treated as Certain
items. (E) Adjusted EPS is a non-GAAP measure, and a
reconciliation of Adjusted EPS to GAAP EPS is presented in the
Certain Items and Reconciliation of Adjusted EPS and Operating Tax
Rate table.
CABOT CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS Periods ended June 30
Three Months
Nine Months
Dollars in millions (unaudited)
2024
2023
2024
2023
Cash Flows from Operating Activities: Net income
(loss)
$
120
$
90
$
278
$
238
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization
36
36
114
107
Other non-cash charges (gains), net
10
8
81
14
Cash dividends received from
equity affiliates
—
—
1
2
Changes in assets and liabilities: Changes in net working capital
(A)
43
71
18
96
Changes in other assets and liabilities, net
(2
)
38
(4
)
—
Cash provided by (used in) operating activities
207
243
488
457
Cash Flows from Investing Activities: Additions to
property, plant and equipment
(52
)
(80
)
(149
)
(166
)
Proceeds from sale of business
—
—
—
6
Other investing activities, net
1
5
3
21
Cash provided by (used in) investing activities
(51
)
(75
)
(146
)
(139
)
Cash Flows from Financing Activities: Change in debt,
net
(45
)
(123
)
(139
)
(221
)
Cash dividends paid to common stockholders
(24
)
(23
)
(69
)
(65
)
Other financing activities, net
(62
)
(15
)
(118
)
(85
)
Cash provided by (used in) financing activities
(131
)
(161
)
(326
)
(371
)
Effect of exchange rate changes on cash
(34
)
8
(57
)
67
Increase (decrease) in cash and cash equivalents
(9
)
15
(41
)
14
Cash and cash equivalents at beginning of period
206
205
238
206
Cash and cash equivalents at end of period
$
197
$
220
$
197
$
220
(A) Includes Accounts and notes receivable, Inventories, and
Accounts payable and accrued liabilities.
CABOT
CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND
OPERATING TAX RATE TABLE 1: DETAIL OF CERTAIN
ITEMS Periods ended June 30
Three Months
Nine Months
Dollars in millions, except per share amounts (unaudited)
2024
2023
2024
2023
Certain items before and after income
taxes Argentina controlled currency devaluation and other
losses
$
(2
)
$
―
$
(43
)
$
―
Global restructuring activities
(1
)
—
(13
)
—
Acquisition and integration-related charges
—
(1
)
—
(2
)
Legal and environmental matters and reserves
—
—
(1
)
(2
)
Gain on sale of land
—
—
—
1
Loss on sale of business and asset impairment charge
—
—
—
(3
)
Other Certain Items
1
—
1
(1
)
Total certain items, pre-tax
(2
)
(1
)
(56
)
(7
)
Non-GAAP tax adjustments(A)
3
2
3
3
Total certain items after tax
$
1
$
1
$
(53
)
$
(4
)
Total certain items after tax per share
$
0.02
$
0.01
$
(0.95
)
$
(0.08
)
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE
ITEM Periods ended June 30
Three Months
Nine Months
Dollars in millions, Pre-Tax (unaudited)
2024
2023
2024
2023
Statement of Operations Line Item
(B) Cost of sales
$
—
$
(1
)
$
(12
)
$
(4
)
Selling and administrative expenses
—
—
(1
)
—
Other income (expense)
(2
)
—
(43
)
—
Loss on sale of business
—
—
—
(3
)
Total certain items
$
(2
)
$
(1
)
$
(56
)
$
(7
)
TABLE 3: RECONCILIATION OF EFFECTIVE TAX RATE TO
OPERATING TAX RATE Three months June 30
2024
2023
Dollars in millions (unaudited) (Provision) /Benefit forIncome
Taxes Rate (Provision) /Benefit forIncome Taxes Rate Effective Tax
Rate
$
(40
)
25
%
$
(41
)
32
%
Less: Non-GAAP tax adjustments(A)
3
2
Operating tax rate (C) (D)
$
(43
)
27
%
$
(43
)
33
%
Nine months ended June 30
2024
2023
Dollars in millions (unaudited)
(Provision) / Benefit for Income
Taxes
Rate
(Provision) / Benefit for Income
Taxes
Rate
Effective Tax Rate
$
(121
)
31
%
$
(90
)
28
%
Less: Non-GAAP tax adjustments(A)
3
3
Operating tax rate (C) (D)
$
(124
)
28
%
$
(93
)
28
%
TABLE 4: RECONCILIATION OF ADJUSTED EPS BY QUARTER
FOR FISCAL 2024 and FISCAL 2023 Fiscal 2024 (E) Periods
ended (unaudited) Dec. Q Mar. Q June Q Sept. Q FY 2024
Reconciliation of Adjusted EPS to GAAP EPS Net
income (loss) per share attributable to Cabot Corporation
$
0.88
$
1.49
$
1.94
$
—
$
4.30
Less: Certain items after tax per share
(0.68
)
(0.29
)
0.02
—
(0.95
)
Adjusted earnings (loss) per share
$
1.56
$
1.78
$
1.92
$
—
$
5.25
Fiscal 2023 (E) Periods ended (unaudited) Dec. Q Mar.
Q June Q Sept. Q FY 2023
Reconciliation of
Adjusted EPS to GAAP EPS Net income (loss) per share
attributable to Cabot Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
Less: Certain items after tax per share
(0.05
)
(0.04
)
0.01
2.45
2.35
Adjusted earnings (loss) per share
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
(A) Non-GAAP tax adjustments are made to arrive at the operating
tax provision. It includes the income tax (expense) benefit on
certain items, discrete tax items, and, on a quarterly basis the
timing of losses in certain jurisdictions. The income tax (expense)
benefit on certain items is determined using the applicable rates
in the taxing jurisdictions in which the certain items occurred and
includes both current and deferred income tax (expense) benefit
based on the nature of the certain items. Discrete tax items
include, but are not limited to, changes in valuation allowance,
uncertain tax positions, and other tax items, such as the tax
impact of legislative changes and tax accruals on historic earnings
due to changes in indefinite reinvestment assertions. (B)
This table indicates the line items where certain items are
recorded in the Consolidated Statements of Operations. (C)
The operating tax rate is calculated based upon management's
forecast of the annual operating tax rate for the fiscal year
applied to adjusted pre-tax earnings. The operating tax rate
excludes income tax (expense) benefit on certain items, discrete
tax items and, on a quarterly basis the timing of losses in certain
jurisdictions. (D) Our operating tax rate for fiscal 2024 is
expected to be in the range of 27% to 28%. (E) Per share
amounts are calculated after tax.
CABOT CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Fiscal 2024 (A) Dec. Q Mar. Q
June Q Sept. Q FY 2024
Reconciliation of Adjusted EPS to GAAP EPS
Net income (loss) per share
attributable to Cabot Corporation
$
0.88
$
1.49
$
1.94
$
—
$
4.30
Less: Certain items after tax per share
(0.68
)
(0.29
)
0.02
—
(0.95
)
Adjusted earnings (loss) per share
$
1.56
$
1.78
$
1.92
$
—
$
5.25
Fiscal 2023 (A) Dec. Q
Mar. Q June Q Sept. Q FY 2023
Reconciliation of Adjusted EPS to GAAP
EPS Net income (loss) per
share attributable to Cabot Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
Less: Certain items after tax per share
(0.05
)
(0.04
)
0.01
2.45
2.35
Adjusted earnings (loss) per share
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
(A)
Per share amounts are calculated after tax.
Dollars in millions
Fiscal 2024 Dec. Q
Mar. Q June Q Sept. Q FY 2024
Reconciliation of Total Segment EBIT, Total Segment
EBITDA and Adjusted EBITDA to Net Income and Segment EBITDA
Margin Net income (loss)
attributable to Cabot Corporation
$
50
$
84
$
109
$
―
$
243
Net income (loss) attributable to noncontrolling interests
11
13
11
—
35
Equity in earnings of affiliated companies, net of tax
(1
)
(2
)
(2
)
—
(5
)
Provision (benefit) for income taxes
34
47
40
—
121
Income (loss) from operations before income taxes and equity in
earnings of affiliated companies
$
94
$
142
$
158
$
―
$
394
Interest expense
22
21
19
—
62
Certain items
42
12
2
—
56
Unallocated corporate costs
17
18
16
—
51
General unallocated (income) expense
(13
)
(15
)
(6
)
—
(34
)
Less: Equity in earnings of affiliated companies
(1
)
(2
)
(2
)
—
(5
)
Total Segment EBIT
$
163
$
180
$
191
$
―
$
534
Depreciation and amortization excluding corporate depreciation
35
37
36
—
108
Total Segment EBITDA
$
198
$
217
$
227
$
―
$
642
Less: Unallocated corporate costs before corporate depreciation
17
18
16
—
51
Adjusted EBITDA
$
181
$
199
$
211
$
―
$
591
Dollars in millions Dec. Q
Mar. Q June Q Sept. Q FY 2024
Reinforcement Materials EBIT
$
129
$
149
$
136
$
―
$
414
Reinforcement Materials Depreciation and amortization
17
16
16
—
49
Reinforcement Materials EBITDA
$
146
$
165
$
152
$
―
$
463
Reinforcement Materials Sales
$
641
$
676
$
649
$
―
$
1,966
Reinforcement Materials EBITDA Margin
23
%
24
%
23
%
—
%
24
%
Dollars in millions Dec. Q
Mar. Q June Q Sept. Q FY 2024
Performance Chemicals EBIT
$
34
$
31
$
55
$
―
$
120
Performance Chemicals Depreciation and amortization
18
20
20
—
58
Performance Chemicals EBITDA
$
52
$
51
$
75
$
―
$
178
Performance Chemicals Sales
$
285
$
311
$
332
$
―
$
928
Performance Chemicals EBITDA Margin
18
%
16
%
23
%
—
%
19
%
Dollars in millions
Fiscal
2024 Reconciliation of Free Cash Flow
and Discretionary Free Cash Flow to Cash provided by (used in)
operating activities Dec. Q Mar. Q June Q
Sept. Q FY 2024
Cash provided by (used in)
operating activities (B)
$
105
$
176
$
207
$
―
$
488
Less: Additions to property, plant and equipment
54
43
52
—
149
Free cash flow
$
51
$
133
$
155
$
―
$
339
Plus: Additions to property, plant and equipment
54
43
52
—
149
Less: Changes in net working capital (C)
(46
)
21
43
—
18
Less: Sustaining and compliance capital expenditures
33
27
36
—
96
Discretionary free cash flow
$
118
$
128
$
128
$
―
$
374
(B)
As provided in the Condensed Consolidated Statements of Cash Flows.
(C)
Defined as changes in Accounts and notes receivable, Inventories,
and Accounts payable and accrued liabilities as presented on the
Condensed Consolidated Statements of Cash Flows.
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version on businesswire.com: https://www.businesswire.com/news/home/20240802864032/en/
Investor Contact: Steve Delahunt (617) 342-6255
Grafico Azioni Cabot (NYSE:CBT)
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