Galeanu MihaiIntro We wrote about Cabot Corporation (NYSE:CBT) in April of last year when we stated that lower volumes & overbought technicals would most likely lead to volatility over the near term. Although shares did drop some 10%+ over the following two months, shares initially bottomed in late June'2023 before rallying once more post the company's encouraging Q4 report announced last November. However, the consolidation shares underwent for well over 6 months in the mid-point of calendar 2023 means ...

Financial Performance - Net sales for 2023 were $3,931 million, a decrease of 9% from $4,321 million in 2022[82] - Gross profit for 2023 was $839 million, down from $885 million in 2022, reflecting a gross margin of approximately 21.4%[82] - Net income attributable to Cabot Corporation for 2023 was $445 million, compared to $209 million in 2022, representing a significant increase of 113%[82] - Basic earnings per share for 2023 were $7.79, up from $3.65 in 2022, indicating a growth of 113%[82] - Net income for fiscal 2023 was $484 million, a significant increase from $243 million in fiscal 2022, representing a growth of 99%[88] - The company’s comprehensive income attributable to Cabot Corporation was $522 million for the fiscal year[115] - Net income attributable to Cabot Corporation for the year ended September 30, 2023, was $445 million, a significant increase from $209 million in 2022, representing a 113% growth[253] Assets and Liabilities - Total current assets decreased to $1,626 million in 2023 from $1,820 million in 2022, primarily due to lower accounts receivable and inventories[85] - Total liabilities decreased to $2,197 million in 2023 from $2,339 million in 2022, reflecting improved financial stability[87] - Total stockholders' equity increased to $1,407 million in 2023 from $1,032 million in 2022, reflecting strong retained earnings growth[87] - Cash and cash equivalents increased to $238 million in 2023 from $206 million in 2022, indicating better liquidity[85] - Long-term debt as of September 30, 2023, was $1.082 billion, with fixed interest payments totaling $270 million[106] - The company reported a total debt of $1,102 million as of September 30, 2023, slightly up from $1,096 million in 2022, with long-term debt at $1,094 million[164] Cash Flow and Investments - Cash provided by operating activities increased to $595 million in fiscal 2023, compared to $100 million in fiscal 2022[88] - Cash used in investing activities was $214 million in fiscal 2023, up from $118 million in fiscal 2022, primarily due to $244 million in capital expenditures[102] - Capital expenditures for fiscal 2024 are expected to be between $250 million and $275 million, focusing on sustaining and compliance projects as well as capacity expansion[102] - Cash dividends paid to common stockholders totaled $88 million in fiscal 2023, compared to $84 million in fiscal 2022, with dividends per share increasing from $1.48 to $1.54[104] Foreign Currency and Taxation - The company reported a foreign currency translation adjustment of $80 million in 2023, compared to a loss of $175 million in 2022, indicating improved currency stability[83] - The company experienced a net foreign currency transaction loss of $35 million in fiscal 2023, compared to $13 million in fiscal 2022[98] - The provision for income taxes for the year ended September 30, 2023, was a benefit of $(28) million, compared to a provision of $102 million in 2022[227] - Total deferred tax assets increased to $214 million in 2023 from $82 million in 2022, reflecting a significant rise of 161%[206] - The total deferred tax liabilities decreased to $(84) million in 2023 from $(102) million in 2022, a decline of 18%[206] Pension and Employee Benefits - As of September 30, 2023, the consolidated pension obligation, net of plan assets, was $22 million, with cash contributions of $4 million made in fiscal 2023 and expected in fiscal 2024[105] - The unfunded postretirement benefit plan liabilities totaled $25 million, comprising $14 million for U.S. plans and $11 million for foreign plans, with expected benefit payments of $3 million for fiscal 2024[105] - The net periodic defined benefit cost for the U.S. pension plan was $2 million, with foreign pension costs at $3 million[173] - The company expects to contribute $4 million to its pension plans in fiscal 2024[190] Operational Expenses - Selling and administrative expenses include salaries and general office expenses, reflecting operational costs[177] - Research and technical expenses were $57 million in 2023, slightly up from $55 million in 2022, showing continued investment in innovation[82] - Depreciation expense for fiscal 2023 was $138 million, a slight decrease from $140 million in 2022[159] Environmental and Legal Matters - As of September 30, 2023, Cabot had $5 million reserved for environmental matters, up from $4 million in 2022[239] - Environmental expense charges were $1 million in both fiscal 2023 and 2022, with cash payments of $1 million in 2023 and $2 million in both 2022 and 2021[240] - The Company anticipates that expenditures related to environmental matters will be made over a number of years[240] Stock and Equity - The company recognized a net stock-based compensation expense of $18 million for the year ended September 30, 2023[195] - The intrinsic value of options exercised in fiscal 2023 was $2 million, compared to $4 million in 2022[221] - The aggregate intrinsic value for all options outstanding as of September 30, 2023, was $29 million[221] - The weighted average grant date fair value of options granted in fiscal 2023 was $26.28, significantly higher than $15.95 in 2022[221] Revenue Recognition - Revenue is recognized when control of goods is transferred to customers, with substantial revenue based on a point-in-time model[150] - Total revenues from external customers for fiscal 2023 were $3.931 billion, a decrease from $4.321 billion in 2022[249]

Q4 FISCAL 2023 4 Reinforcement Materials Update Structurally different business with growing and resilient results | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------------|---------|---------------------|-------|------------------|-------------|--------------------|----------------------------------------------------------------------------------------------| | | | FY EBIT | 1 | | Progression ($M) | $482 $408 | | Current Industry and Business Dynamics \n◆ Cabot is a global leader in re ...

Cabot Corporation (NYSE:CBT) Q4 2023 Earnings Conference Call November 7, 2023 8:00 AM ET Company Participants Steve Delahunt - VP of IR and Treasurer Sean Keohane - President and CEO Erica McLaughlin - EVP, CFO and Head of Corporate Strategy Conference Call Participants John Roberts - Mizuho Josh Spector - UBS Laurence Alexander - Jefferies Chris Kapsch - Loop Capital Markets David Begleiter - Deutsche Bank Operator Hello and welcome to the Q4 2023 Cabot Earnings Conference Call. At this time, all particip ...

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q3 2023 was $1.42, up 7% sequentially, but down from $1.73 in Q3 2022 [6][38] - The balance sheet remained strong with net debt to EBITDA at 1.7 times and total liquidity at $1.3 billion [7][17] - Discretionary free cash flow for the quarter was $128 million, with cash flow from operations at $243 million [17][21] Business Line Data and Key Metrics Changes - Reinforcement Materials achieved record EBIT of $132 million, up 17% year-over-year and 8% sequentially, despite an 8% decline in volumes [6][18] - Performance Chemicals saw EBIT decrease by $31 million year-over-year, driven by a 9% decline in volumes and lower unit margins [40] - Battery materials volumes increased by 29% sequentially and 50% year-over-year, reflecting recovery in the China EV market [12] Market Data and Key Metrics Changes - Year-to-date volumes in Reinforcement Materials were down 8%, primarily due to inventory destocking [8] - Manufacturing PMI levels in the U.S. and Europe remain below 50, indicating weak demand in industrial sectors [10] - The China EV market is recovering, but competitive intensity is increasing, impacting pricing and margins [12][35] Company Strategy and Development Direction - The company is focusing on market segmentation towards higher-performing batteries, particularly NCM chemistry, and managing the balance between volume and pricing [36][81] - The strategy emphasizes growth in North America and Europe, anticipating that these regions will comprise about 50% of the global battery market over the next decade [37][81] - The company aims to maintain a disciplined capital allocation strategy while returning cash to shareholders through dividends and share repurchases [19][69] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging macroeconomic environment with weak demand in key end markets, particularly in housing and construction [28][71] - The expectation is for adjusted earnings per share in Q4 to be in the range of $1.40 to $1.55, with strong cash flow anticipated [21][69] - Management expressed confidence that volumes will normalize post-destocking cycle, with a potential positive turn in demand expected [46][73] Other Important Information - The company raised its dividend by 8% in May and has returned $113 million to shareholders year-to-date [19] - The fiscal year operating tax rate increased from 25% to 28%, impacting adjusted earnings per share [39] - The company is recognized as a leader in sustainability, which underpins its strategic direction [72] Q&A Session All Questions and Answers Question: How long has the destock cycle lasted for replacement tires? - Management indicated that the current destock cycle appears more prolonged than historical patterns, with expectations of a positive turn as inventory levels normalize [46][73] Question: How are annual contract negotiations progressing? - Management believes price increases are necessary due to rising sustainability costs and expects that previous multi-year agreements will set the baseline for future contracts [48] Question: How much has the energy co-product credit declined due to lower oil prices? - The company noted a decline of approximately $20 million in energy center benefits for the full year 2023 compared to 2022 [51] Question: Are all carbon black producers reducing production similarly? - Management stated that volume declines are consistent with major tire producers, indicating stability in the market without significant share shifts [52] Question: Can you elaborate on the battery business outlook? - Management acknowledged a downward revision in EBITDA expectations for the battery business due to market dynamics in China and delays in ramping up volumes with Western customers [56][58] Question: What is the impact of Russian imports on the carbon black market? - Management indicated that Russian exports to Europe are down significantly and are expected to go to zero due to sanctions, with no material impact on competitive dynamics in China [114]

CABOT EARNINGS TELECONFERENCE THIRD QUARTER – FISCAL 2023 CABOT Z This presentation 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 2023, including our expectations for adjusted earnings per share and the assumptions supporting our expectations, the factors that we expect will impact our results of operations, including for volumes in the fourth quarter of fiscal 2023 ...

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the quarterly period ended June 30, 2023, show a decrease in net sales and net income compared to the same period in 2022. Net sales for the third quarter were $968 million, down from $1,149 million year-over-year. Net income attributable to Cabot Corporation was $82 million for the quarter, compared to $97 million in the prior-year period. The balance sheet indicates total assets of $3,387 million as of June 30, 2023. Cash flow from operations for the nine months ended June 30, 2023, was a positive $457 million, a significant improvement from a $5 million use of cash in the prior-year period [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) For the third quarter ended June 30, 2023, Cabot reported Net Sales of $968 million, a decrease from $1,149 million in the same period of 2022. Net income attributable to Cabot Corporation was $82 million, or $1.43 per diluted share, compared to $97 million, or $1.69 per diluted share, in the prior-year quarter. For the nine-month period, net income increased to $211 million from $115 million year-over-year, primarily due to a large asset impairment charge in the prior year not recurring Consolidated Operations Summary | Financial Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net sales and other operating revenues** | $968 million | $1,149 million | $2,966 million | $3,209 million | | **Gross profit** | $223 million | $235 million | $614 million | $665 million | | **Income from operations** | $150 million | $168 million | $384 million | $246 million | | **Net income attributable to Cabot** | $82 million | $97 million | $211 million | $115 million | | **Diluted Earnings per share** | $1.43 | $1.69 | $3.65 | $1.99 | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income attributable to Cabot Corporation was $67 million for the third quarter of 2023, a significant increase from $3 million in the same period of 2022. This was primarily driven by changes in foreign currency translation adjustments. For the nine-month period, comprehensive income was $321 million, compared to $36 million in the prior year, also largely due to favorable foreign currency translation adjustments Consolidated Comprehensive Income Summary | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss)** | $90 million | $106 million | $238 million | $140 million | | **Other comprehensive income (loss), net of tax** | ($21 million) | ($103 million) | $113 million | ($85 million) | | **Comprehensive income (loss) attributable to Cabot** | $67 million | $3 million | $321 million | $36 million | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2023, Cabot's balance sheet showed total assets of $3,387 million, a slight decrease from $3,525 million at September 30, 2022. Total liabilities decreased to $2,121 million from $2,493 million over the same period. Total stockholders' equity increased to $1,266 million from $1,032 million, driven by net income Consolidated Balance Sheet Summary | Balance Sheet Item | June 30, 2023 (In millions) | September 30, 2022 (In millions) | | :--- | :--- | :--- | | **Total current assets** | $1,602 | $1,820 | | **Total assets** | $3,387 | $3,525 | | **Total current liabilities** | $738 | $1,105 | | **Total liabilities** | $2,121 | $2,493 | | **Total stockholders' equity** | $1,266 | $1,032 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2023, net cash provided by operating activities was $457 million, a significant turnaround from the $5 million used in the same period of 2022. Investing activities used $139 million, primarily for capital expenditures. Financing activities used $371 million, driven by net repayments of debt, dividends, and share repurchases. The company's cash and cash equivalents balance increased by $14 million to $220 million Consolidated Cash Flow Summary | Cash Flow Activity (Nine Months Ended June 30) | 2023 (In millions) | 2022 (In millions) | | :--- | :--- | :--- | | **Net cash provided (used) by operating activities** | $457 | ($5) | | **Net cash provided (used) by investing activities** | ($139) | ($31) | | **Net cash provided (used) by financing activities** | ($371) | $129 | | **Increase (decrease) in cash and cash equivalents** | $14 | $44 | | **Cash and cash equivalents at end of period** | $220 | $214 | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide details on accounting policies, acquisitions, divestitures, contingencies, and segment information. Key items include the finalization of the Purification Solutions business sale, which resulted in an additional $3 million pre-tax loss. The company maintains a reserve of $38 million for respirator liabilities. A VAT matter was favorably resolved. Segment reporting shows Reinforcement Materials EBIT increased to $132 million in Q3 2023, while Performance Chemicals EBIT decreased to $32 million - In February 2022, the Company acquired Tokai Carbon (Tianjin) Co. for a net purchase price of **$9 million**, resulting in a gain on bargain purchase of **$24 million**[59](index=59&type=chunk) - The sale of the Purification Solutions business was finalized in Q1 fiscal 2023, resulting in an additional pre-tax loss on sale of **$3 million**[76](index=76&type=chunk) - The reserve for respirator liabilities was **$38 million** as of June 30, 2023, down slightly from **$39 million** at September 30, 2022[70](index=70&type=chunk) - A VAT-related legal matter was resolved favorably for the company in June 2023, making the possibility of a loss remote[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the decrease in Q3 2023 revenue and earnings to lower volumes and unfavorable pricing, particularly in the Performance Chemicals segment, driven by demand softness and customer destocking. The Reinforcement Materials segment showed stronger results with higher unit margins from improved customer agreements. The company maintains a strong liquidity position with $220 million in cash and $1.1 billion in borrowing availability. Capital expenditures for fiscal 2023 are projected to be approximately $250 million [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Consolidated net sales decreased by $181 million (15.8%) in Q3 2023 compared to Q3 2022, driven by lower volumes ($92 million) and unfavorable price/product mix ($56 million). Gross profit declined by $12 million due to lower volumes and higher fixed costs, partially offset by higher unit margins in Reinforcement Materials. Selling and administrative expenses increased due to a prior-year benefit from a land sale Results of Operations Summary | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Net sales and other operating revenues** | $968 million | $1,149 million | | **Gross profit** | $223 million | $235 million | - The decrease in Q3 net sales was driven by lower volumes in both segments (**$92 million**), unfavorable price and product mix (**$56 million**), negative foreign currency impact (**$19 million**), and lower by-product revenue (**$8 million**)[116](index=116&type=chunk) [Segment Performance Analysis](index=26&type=section&id=Segment%20Performance%20Analysis) In Q3 2023, the Reinforcement Materials segment's EBIT increased by $19 million year-over-year to $132 million, driven by higher unit margins that offset lower volumes. Conversely, the Performance Chemicals segment's EBIT fell by $31 million to $32 million, primarily due to lower volumes from demand softness and reduced unit margins Segment Performance Summary | Segment (Q3 2023 vs Q3 2022) | Sales | EBIT | | :--- | :--- | :--- | | **Reinforcement Materials** | $624M vs $730M | $132M vs $113M | | **Performance Chemicals** | $307M vs $376M | $32M vs $63M | - Reinforcement Materials EBIT increased due to higher unit margins from favorable 2023 customer agreements, which more than offset lower volumes from reduced replacement tire demand[126](index=126&type=chunk)[131](index=131&type=chunk) - Performance Chemicals EBIT decreased due to lower volumes from demand softness in key end markets (especially fumed metal oxides) and less favorable product mix in specialty carbons and battery materials[55](index=55&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position remains strong, with $220 million in cash and equivalents and $1.1 billion in borrowing availability as of June 30, 2023. Cash from operations for the first nine months of fiscal 2023 was $457 million, a significant improvement from the prior year. Capital expenditures for fiscal 2023 are expected to be approximately $250 million, focused on sustaining projects and capacity expansion in Performance Chemicals - As of June 30, 2023, the company had cash and cash equivalents of **$220 million** and borrowing availability of **$1.1 billion** under its revolving credit agreements[133](index=133&type=chunk) - Cash provided by operating activities totaled **$457 million** in the first nine months of fiscal 2023, compared to **$5 million** of cash used in the same period of fiscal 2022[136](index=136&type=chunk) - Projected capital expenditures for fiscal 2023 are approximately **$250 million**[140](index=140&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that information about market risks for the period ended June 30, 2023, does not differ materially from the disclosures provided in its Annual Report on Form 10-K for the fiscal year ended September 30, 2022 - There have been no material changes in market risk disclosures since the company's 2022 Form 10-K[43](index=43&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of June 30, 2023, the company's principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective. There were no material changes in internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[43](index=43&type=chunk) - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[43](index=43&type=chunk) Part II. Other Information [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2023, Cabot repurchased a total of 212,161 shares of its common stock at an average price of approximately $70.70 per share. These purchases were made under a publicly announced repurchase plan authorized by the Board of Directors Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | May 1 - May 31, 2023 | 195,000 | $70.65 | | June 1 - June 30, 2023 | 17,161 | $71.30 | | **Total** | **212,161** | **~ $70.70** | - As of June 30, 2023, approximately **3.7 million shares** remained available for repurchase under the company's current authorization[47](index=47&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) The company reported that during the fiscal quarter ended June 30, 2023, none of its directors or officers entered into, modified, or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements - No directors or officers entered into, modified, or terminated Rule 10b5-1 trading plans during the quarter[47](index=47&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the company's amended By-laws, amendments to credit agreements, and certifications by the Principal Executive Officer and Principal Financial Officer - Key exhibits filed include amended By-laws (Exhibit 3.2), amendments to credit agreements (Exhibits 10.1, 10.2), and officer certifications (Exhibits 31.1, 31.2, 32)[50](index=50&type=chunk)

Cabot Corporation (NYSE:CBT) Q2 2023 Earnings Conference Call May 9, 2023 8:00 AM ET Company Participants Steve Delahunt - VP of IR & Treasurer Sean Keohane - President & CEO Erica McLaughlin - EVP, CFO and Head of Corporate Strategy Conference Call Participants John Roberts - Credit Suisse Dan Rizzo - Jefferies Chris Kapsch - Loop Capital Operator Thank you for standing by and Welcome to Cabot's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After th ...

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Selling and administrative expenses decreased by $8 million and $19 million in the second quarter of fiscal 2023 and for the six months ended March 31, 2023, respectively, compared to the same periods of fiscal 2022, primarily due to a decrease in the accrual for incentive compensation in fiscal 2023 and costs associated with the Purification Solutions business in fiscal 2022 that did n ...

CABOT EARNINGS TELECONFERENCE Forward Looking Statements Q1 FISCAL 2023 -------------- CABOTA | --- | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------| | | | | | Q1 2023 Highlights | | | | First quarter results in line with expectations; adjusted EPS 1 of $0.98 and diluted EPS of $0.93 | | | | Reinforcement Materials segment EBIT of $94M; up 11% compa ...