Group 1 - Cabot Corporation (NYSE: CBT) shares have experienced a 35% pullback from last year's highs, indicating a stagnant business performance [1] - Despite a slight increase in earnings this year, the earnings multiples suggest a lack of significant growth [1] - The investing group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports [1]

Group 1 - Cabot Corporation declared a quarterly dividend of $0.45 per share on all outstanding shares of its common stock, payable on September 11, 2025, to stockholders of record at the close of business on August 29, 2025 [1] - Cabot Corporation is a global specialty chemicals and performance materials company headquartered in Boston, Massachusetts, providing a range of products including reinforcing carbons, specialty carbons, battery materials, and more [2] Group 2 - The company is listed on the New York Stock Exchange under the ticker symbol CBT [2]

Core Viewpoint - Cabot Corporation will release its third quarter operating results for fiscal 2025 on August 4, 2025, after market close, followed by a conference call on August 5, 2025 [1]. Company Overview - Cabot Corporation is a global specialty chemicals and performance materials company headquartered in Boston, Massachusetts [3]. - The company specializes in providing reinforcing carbons, specialty carbons, battery materials, engineered elastomer composites, inkjet colorants, masterbatches, conductive compounds, fumed metal oxides, and aerogel [3]. Conference Call Details - The conference call will begin at 8:00 am (ET) on August 5, 2025, and will be available via live webcast on Cabot's website [1][2]. - An archived version of the call and accompanying slide presentation will also be accessible on the company's website for those unable to attend the live session [2].

Core Insights - Cabot Corporation has achieved a platinum rating from EcoVadis for the fifth consecutive year, placing it among the top 1% of companies globally in sustainability performance [1][2] - The company's overall score increased by three points this year, with notable improvements in the sustainable procurement category, and it received "outstanding" scores in both the environment and labor & human rights categories [2][4] - Cabot also maintained a 'B' rating in climate change and water security from CDP, positioning it as a leading carbon black manufacturer [3][4] Group 1: Sustainability Recognition - Cabot Corporation has been recognized for its exceptional sustainability performance by EcoVadis, receiving the highest platinum rating [1][3] - The company is committed to continuous improvement in sustainability, as reflected in its ability to maintain high ratings despite evolving criteria [4] Group 2: Performance Metrics - Cabot's overall EcoVadis score increased by three points this year, indicating significant progress in sustainability efforts [2] - The company received top scores in the environment and labor & human rights categories, showcasing its strong performance in these areas [2][4] Group 3: Industry Positioning - Cabot's 'B' ratings from CDP in climate change and water security highlight its leadership among carbon black manufacturers [3][4] - The rigorous evaluation frameworks of EcoVadis and CDP emphasize the increasing challenges in maintaining high sustainability scores [4]

Company Overview - Cabot (CBT) shares have increased by approximately 3.9% over the past month, underperforming the S&P 500 index [1] - The most recent earnings report is crucial for understanding the key drivers affecting the stock [1] Earnings Estimates - Estimates for Cabot have trended downward in the past month, with a consensus estimate shift of -6.59% [2] - The overall direction of estimate revisions indicates a negative outlook for the stock [4] VGM Scores - Cabot has a Growth Score of B, but a low Momentum Score of F, while achieving an A grade in value, placing it in the top 20% for this investment strategy [3] - The aggregate VGM Score for Cabot is B, which is relevant for investors not focused on a single strategy [3] Industry Performance - Cabot is part of the Zacks Chemical - Diversified industry, where another player, Air Products and Chemicals (APD), has seen a 5.9% gain over the past month [5] - Air Products and Chemicals reported revenues of $2.92 billion for the last quarter, reflecting a year-over-year decline of -0.5% [5] - The expected earnings for Air Products and Chemicals for the current quarter is $2.97 per share, indicating a -7.2% change from the previous year [6]

Group 1 - Cabot, Dow, and Stepan will trade ex-dividend on 5/30/25, with respective dividends of $0.45, $0.70, and $0.385 to be paid on 6/13/25 [1] - The dividend yield for Cabot is approximately 0.59%, for Dow is 2.42%, and for Stepan is 0.68%, indicating expected price drops on the ex-dividend date [2] - Historical dividend stability is crucial for assessing future yields, with current estimated annualized yields of 2.36% for Cabot, 9.68% for Dow, and 2.73% for Stepan [4] Group 2 - In recent trading, Cabot shares increased by about 3%, Dow shares by 2.1%, and Stepan shares by 3.7% [5]

Group 1 - The last analysis on Cabot Corporation (NYSE: CBT) occurred in late January, resulting in a downgrade to a 'Hold' rating due to muted growth rates and poor near-term EPS revisions [1] - The company operates in the specialty chemicals and performance materials sector, focusing on undervalued profitable stocks with strong balance sheets and minimal debt [1] Group 2 - The investment strategy includes writing calls against positions to generate additional income, with risk management controlled through position sizing and trailing stop losses [1]

Core Insights - Cabot Corporation (CBT) reported second-quarter fiscal 2025 earnings of $1.69 per share, an increase from $1.49 in the same quarter last year, with adjusted earnings at $1.90 per share, surpassing the Zacks Consensus Estimate of $1.86 [1] - The company's net sales for the quarter were $936 million, falling short of the Zacks Consensus Estimate of $1,038.1 million, representing an 8.2% decrease year-over-year [1] Segment Highlights - Sales in the Reinforcement Materials segment decreased by 12.1% year-over-year to $594 million, missing the Zacks Consensus Estimate of $678.5 million, with EBIT down 12.1% to $131 million due to lower tire demand and contract outcomes in South America [2] - Performance Chemicals unit sales remained flat at $311 million, below the Zacks Consensus Estimate of $328.9 million, while EBIT increased by 61.2% to $50 million, driven by higher volumes in fumed metal oxides for construction and semiconductor applications [3] Financials - At the end of the second quarter, the company had a cash balance of $213 million, with cash flows from operating activities generating $73 million [4] - Capital expenditures totaled $72 million, with $23 million used for dividends and $47 million for share repurchases during the quarter [4] Outlook - The company revised its adjusted EPS guidance for fiscal 2025 to a range of $7.15 to $7.50, reflecting expectations of softer demand due to the uncertain impact of recently implemented tariff policies [5][6] - The revised guidance assumes the company will maintain profit margins consistent with those achieved in the second fiscal quarter [6] Price Performance - Cabot's shares have declined by 27% over the past year, compared to a 30.4% decline in the industry [7]

Part I. Financial Information This section provides the unaudited interim financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Cabot Corporation's unaudited consolidated financial statements for the interim periods ended March 31, **2025**, and **2024**, along with detailed notes on accounting policies and disclosures [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Cabot Corporation's unaudited consolidated statements show decreased net sales but increased net income for both the three and six months ended March **31**, **2025** Consolidated Statements of Operations Highlights (In millions, except per share amounts) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales and other operating revenues | $936 | $1,019 | $1,891 | $1,977 | | Gross profit | $241 | $246 | $476 | $464 | | Income from operations | $162 | $156 | $317 | $292 | | Net income attributable to Cabot Corporation | $94 | $84 | $187 | $134 | | Diluted Earnings per common share | $1.69 | $1.49 | $3.36 | $2.37 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March **31**, **2025**, total assets increased slightly to **$3.784 billion**, while total liabilities also rose, and total stockholders' equity remained flat Consolidated Balance Sheet Highlights (In millions) | Metric | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $213 | $223 | | Total current assets | $1,603 | $1,605 | | Net property, plant and equipment | $1,603 | $1,534 | | Total assets | $3,784 | $3,736 | | **Liabilities & Equity** | | | | Total current liabilities | $818 | $772 | | Long-term debt | $1,090 | $1,087 | | Total liabilities | $2,194 | $2,146 | | Total stockholders' equity | $1,590 | $1,590 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March **31**, **2025**, cash provided by operating activities decreased, while cash used in investing activities increased, and cash used in financing activities significantly decreased Consolidated Cash Flow Summary (In millions) | Cash Flow Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $197 | $281 | | Cash used in investing activities | ($174) | ($95) | | Cash used in financing activities | ($7) | ($195) | | Increase (decrease) in cash | ($10) | ($32) | | Cash and cash equivalents at end of period | $213 | $206 | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed information supporting the financial statements, covering accounting policies, acquisitions, contingencies, and segment performance - In October **2024**, the Company acquired certain assets and licensed technology for its Battery Materials product line for **$27 million**, allocated to property, plant and equipment (**$19 million**) and intangible assets (**$8 million**)[37](index=37&type=chunk) - The Company maintains a reserve of **$34 million** as of March **31**, **2025**, for expected liabilities related to a former respirator products business[40](index=40&type=chunk)[41](index=41&type=chunk) - Foreign exchange losses related to Argentina were significantly lower in the first six months of fiscal **2025** (**$2 million**) compared to the same period in **2024** (**$40 million**), which included a **$33 million** loss from a single devaluation event[32](index=32&type=chunk) Segment EBIT (In millions) | Segment | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Reinforcement Materials | $131 | $149 | $261 | $278 | | Performance Chemicals | $50 | $31 | $95 | $65 | | **Total Segment EBIT** | **$181** | **$180** | **$356** | **$343** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, highlighting decreased net sales but increased gross profit for the six-month period, alongside detailed segment performance, liquidity, and cash flow activities [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Consolidated net sales for Q2 **2025** decreased year-over-year, while net income attributable to Cabot rose in both the quarter and six-month period, largely due to lower foreign exchange losses - Q2 **2025** net sales decreased by **$83 million** YoY, driven by lower Reinforcement Materials volumes (**$48M**), unfavorable pricing/mix (**$24M**), and negative currency impact (**$28M**), partly offset by higher Performance Chemicals volumes (**$16M**)[78](index=78&type=chunk)[79](index=79&type=chunk) - Net income for Q2 **2025** rose to **$94 million** from **$84 million** YoY, mainly due to higher Segment EBIT in Performance Chemicals (**+$19M**) and lower losses from Argentina's currency devaluation (**+$8M**), which offset lower EBIT from Reinforcement Materials (**-$18M**)[95](index=95&type=chunk) - The company expects the operating tax rate for fiscal **2025** to be in the range of **27% to 29%**[92](index=92&type=chunk) [Business Segment Analysis](index=27&type=section&id=Business%20Segment%20Analysis) In Q2 **2025**, Reinforcement Materials EBIT fell due to lower volumes, while Performance Chemicals EBIT grew from higher volumes and improved gross profit per ton Reinforcement Materials Segment Results (In millions) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales | $594 | $676 | $1,205 | $1,317 | | EBIT | $131 | $149 | $261 | $278 | - The decrease in Reinforcement Materials EBIT was primarily driven by lower volumes (**$20 million** impact) resulting from lower tire demand and contract outcomes in South America[103](index=103&type=chunk) Performance Chemicals Segment Results (In millions) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales | $311 | $311 | $622 | $596 | | EBIT | $50 | $31 | $95 | $65 | - The increase in Performance Chemicals EBIT was driven by higher gross profit per ton (**$9 million**) and higher volumes (**$9 million**), particularly in the Fumed Metal Oxides product line[107](index=107&type=chunk)[108](index=108&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position decreased in the first six months of fiscal **2025**, with reduced cash from operations, increased capital expenditures, and significant share repurchases - As of March **31**, **2025**, the company had cash and cash equivalents of **$213 million** and borrowing availability of **$1.0 billion** under its revolving credit agreements[112](index=112&type=chunk) - Cash provided by operating activities decreased to **$197 million** in the first six months of fiscal **2025**, compared to **$281 million** in the prior year period, mainly due to an increase in net working capital[119](index=119&type=chunk)[120](index=120&type=chunk) - Capital expenditures for fiscal **2025** are projected to be between **$250 million and $275 million**[124](index=124&type=chunk) - During the first six months of fiscal **2025**, the company repurchased **$89 million** of its shares and paid **$47 million** in dividends to common stockholders[126](index=126&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that information regarding market risks for the period ended March **31**, **2025**, has not materially changed from prior disclosures - There are no material changes in market risk disclosures from the company's **2024** **10-K** report[131](index=131&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on evaluation, the company's disclosure controls and procedures were effective as of March **31**, **2025**, with no material changes to internal controls over financial reporting - Management, including the CEO and CFO, concluded that as of March **31**, **2025**, the company's disclosure controls and procedures were effective[132](index=132&type=chunk) - No changes occurred during the fiscal quarter ended March **31**, **2025**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[133](index=133&type=chunk) Part II. Other Information This section includes information on unregistered sales of equity securities, other general disclosures, and a list of exhibits filed with the report [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended March **31**, **2025**, Cabot repurchased a total of **527,379** shares of common stock under a board-authorized program that was recently expanded Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | — | | February 2025 | 462,379 | $86.51 | | March 2025 | 65,000 | $82.05 | | **Total** | **527,379** | **N/A** | - In December **2024**, the Board of Directors authorized the repurchase of an additional **ten million** shares of common stock[134](index=134&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) The company reports that no directors or officers entered into, modified, or terminated any Rule **10b5-1** trading plans or non-Rule **10b5-1** trading arrangements during the quarter - No directors or officers entered into, modified, or terminated Rule **10b5-1** trading plans or other trading arrangements during the quarter ended March **31**, **2025**[135](index=135&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form **10-Q**, including corporate governance documents, equity award certificates, and required officer certifications - Filed exhibits include corporate governance documents, forms of equity award certificates, and required officer certifications (Rule **13a-14(a)** and Section **1350**)[136](index=136&type=chunk)

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q2 2025 was $1.90, up 7% compared to $1.78 in Q2 2024, and up 10% for the first half of fiscal 2025 compared to the same period in fiscal 2024 [5][14] - Cash flow from operations was $73 million, with discretionary free cash flow at $110 million, and a cash balance of $213 million at the end of the quarter [14][15] - The company announced a 5% increase in its quarterly dividend, marking ten consecutive years of annual dividend increases [9][24] Business Segment Data and Key Metrics Changes - EBIT in Reinforcement Materials was $131 million, down 12% year-over-year, primarily due to lower tire demand [6][15] - Performance Chemicals saw EBIT increase by 61% year-over-year, driven by improved margins and higher volumes, particularly in the fumed silica product line [6][7] - Year-over-year volume growth of 10% was achieved in the battery materials product line during the first half of fiscal 2025 [8] Market Data and Key Metrics Changes - In The Americas, volumes were down 9%, with South America experiencing a significant decline due to lower contract outcomes [15][29] - Asia Pacific volumes decreased by 8%, primarily driven by reduced production during the Lunar New Year holiday [30] - European volumes remained flat year-over-year, with some gains in the contract season [32] Company Strategy and Development Direction - The company is focusing on high-performance segments in China and developing business with customers building battery plants in Western economies [8][12] - The "Creating for Tomorrow" strategy aims to position the company for long-term shareholder value creation [12][24] - The company is executing fixed cost and procurement initiatives expected to contribute $30 million in savings for fiscal 2025 [12][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the current tariff landscape is dynamic, causing customers to adopt a cautious posture regarding inventory levels [11][19] - The company expects volumes in Reinforcement Materials to decline in the low single-digit percentage for the fiscal year, while Performance Chemicals is expected to see low single-digit percentage growth [22][24] - Despite uncertainties, management remains confident in the company's fundamentals and cash generation capabilities [24][25] Other Important Information - Capital expenditures for Q2 2025 were $72 million, with a revised full-year forecast of $250 million to $275 million [14][66] - The company maintains a strong liquidity position of approximately $1.2 billion [15] Q&A Session Summary Question: Can you provide context on the reinforcement volume changes? - Management explained that the volume picture varies by region, with significant declines in South America and a more cautious approach from customers in North America [27][28] Question: How do volumes split between North America and South America in the Reinforcement Materials segment? - Management indicated that approximately 60% of volumes come from North America and 40% from South America, with South American volumes down sharply [38][39] Question: What are the underlying price dynamics in the Reinforcement Materials segment? - Pricing remains largely flat due to contract negotiations, with steady margins in Asia Pacific's spot market [41][42] Question: What is the expected impact on energy center revenues? - Management expects a mid-single-digit million impact headwind in the second half due to declining oil prices [44] Question: Can you elaborate on the cost savings initiatives? - The $30 million in cost savings includes a mix of temporary and structural measures, with most savings expected to be recognized in the second half of the year [54][56] Question: What is the current capacity utilization across the industry? - Capacity utilization varies by region, with North America in the low 80s, Europe in the upper 80s, and Asia Pacific around 90% [62][63]