Core Insights - Cabot Corporation (CBT) has experienced a 20.4% increase in stock value over the past six months, driven by strong earnings performance and positive revisions to earnings guidance [1] - The stock is considered an attractive investment opportunity with strong growth prospects, reflected in its Zacks Rank 2 (Buy) [1] Earnings Performance - CBT has consistently outperformed the Zacks Consensus Estimate, achieving positive earnings surprises in the last four quarters with an average surprise of 8.6% [2] - The Zacks Consensus Estimate for CBT's fiscal 2024 earnings is projected at $7.07, indicating a 31.4% increase from the previous year, with a further 10.6% increase expected in fiscal 2025 [3] Earnings Estimates Revision - In the last two months, the Zacks Consensus Estimate for CBT's fiscal 2024 earnings has been raised by 4.3%, while the estimate for fiscal 2025 has seen a 3.9% upward revision [4] Stock Performance Comparison - Over the past year, Cabot's shares have surged 41.7%, contrasting with an 8.2% decline in the industry [5] Business Segment Performance - In the fiscal third quarter, Cabot's Performance Chemicals division reported an 8.1% year-over-year sales growth, reaching $332 million, with EBIT increasing by 72% to $55 million due to higher volumes and a favorable product mix [5] - The Reinforcement Materials segment also benefited from increased volumes in Europe and Asia Pacific, along with improved pricing and product mix in 2024 customer agreements [6] Future Outlook - The company has raised its fiscal 2024 adjusted EPS guidance to a range of $7.00-$7.10, reflecting an increase of 30 cents at the midpoint, based on expected strong results from the Performance Chemicals segment and continued strength in the Reinforcement Materials unit [7]

For those looking to find strong Basic Materials stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Cabot (CBT) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out. Cabot is one of 236 individual stocks in the Basic Materials sector. Collectively, these companies sit at #15 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individua ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies. Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely o ...

Cabot Corporation's (CBT) shares reached a fresh 52-week high of $105.30 on Aug 23 before closing at $104.24. In the past year, the stock has appreciated 48.3% against the industry's 6.1% decline in the same period. Image Source: Zacks Investment Research What's Driving Cabot? In the fiscal third quarter, Cabot's Performance Chemicals division posted an impressive 8.1% year-over-year sales growth, reaching $332 million. The segment's EBIT jumped by around 72% to $55 million. The substantial EBIT growth was ...

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock. By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss. However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style S ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of ...

Investors interested in Basic Materials stocks should always be looking to find the best-performing companies in the group. Has Cabot (CBT) been one of those stocks this year? By taking a look at the stock's year-to-date performance in comparison to its Basic Materials peers, we might be able to answer that question. Cabot is one of 236 individual stocks in the Basic Materials sector. Collectively, these companies sit at #11 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, meas ...

Core Viewpoint - Cabot's stock has shown strong performance, increasing 7% over the past month and reaching a 52-week high of $103.57, with a year-to-date gain of 15.7% compared to declines in the broader Basic Materials sector and the Chemical - Diversified industry [1]. Financial Performance - Cabot has consistently exceeded earnings expectations, reporting an EPS of $1.92 against a consensus estimate of $1.74 in its latest earnings report [2]. - For the current fiscal year, Cabot is projected to achieve earnings of $6.87 per share on revenues of $4 billion, reflecting a 27.7% increase in EPS and a 1.86% increase in revenues. For the next fiscal year, expected earnings are $7.58 per share on $4.21 billion in revenues, indicating year-over-year changes of 10.43% and 5.2%, respectively [3]. Valuation Metrics - Cabot's stock trades at 14.1 times the current fiscal year EPS estimates, below the peer industry average of 17.3 times. On a trailing cash flow basis, it trades at 11.9 times compared to the peer group's average of 8.2 times. The stock has a PEG ratio of 0.95, suggesting it is not among the top value stocks [7]. Style Scores - Cabot holds a Value Score of A, along with Growth and Momentum Scores of A, resulting in a combined VGM Score of A, indicating strong performance across these metrics [6]. Zacks Rank - Cabot has a Zacks Rank of 2 (Buy), supported by rising earnings estimates. This aligns with the recommendation for investors to consider stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, suggesting potential for further stock price appreciation [8].

Part I [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents Cabot Corporation's unaudited consolidated financial statements for the quarter ended June 30, 2024, including key financial statements and accompanying notes [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales increased to **$1,016 million** in Q3 FY2024, driving net income attributable to Cabot up **32.9% to $109 million** and diluted EPS to **$1.94** Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net sales and other operating revenues** | $1,016 | $968 | $2,993 | $2,966 | | **Gross profit** | $256 | $223 | $720 | $614 | | **Income from operations** | $172 | $150 | $464 | $384 | | **Net income attributable to Cabot** | $109 | $82 | $243 | $211 | | **Diluted earnings per share** | $1.94 | $1.43 | $4.30 | $3.65 | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income attributable to Cabot decreased to **$44 million** in Q3 FY2024, primarily due to a **$66 million** negative foreign currency translation adjustment, with the nine-month comprehensive income also declining to **$223 million** Comprehensive Income (Loss) Highlights (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss)** | $120 | $90 | $278 | $238 | | **Other comprehensive income (loss)** | ($66) | ($21) | ($21) | $113 | | **Comprehensive income (loss) attributable to Cabot** | $44 | $67 | $223 | $321 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets slightly decreased to **$3,580 million**, while total stockholders' equity increased to **$1,496 million** from **$1,407 million** due to retained earnings growth Balance Sheet Summary (in millions) | Metric | June 30, 2024 | September 30, 2023 | | :--- | :--- | :--- | | **Total current assets** | $1,591 | $1,626 | | **Total assets** | $3,580 | $3,604 | | **Total current liabilities** | $717 | $822 | | **Total liabilities** | $2,084 | $2,197 | | **Total stockholders' equity** | $1,496 | $1,407 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2024, cash from operating activities increased to **$488 million**, while investing activities used **$146 million** and financing activities used **$326 million**, resulting in an ending cash balance of **$197 million** Cash Flow Summary - Nine Months Ended June 30 (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $488 | $457 | | **Cash used in investing activities** | ($146) | ($139) | | **Cash used in financing activities** | ($326) | ($371) | | **Effect of exchange rate changes on cash** | ($57) | $67 | | **Net change in cash and cash equivalents** | ($41) | $14 | | **Cash and cash equivalents at end of period** | $197 | $220 | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies and significant financial events, including a **$42 million** foreign exchange loss from Argentine peso devaluation, **$13 million** in restructuring charges, and a planned **$27 million** asset purchase for Battery Materials - The company recorded a **$42 million** foreign exchange loss in the first nine months of fiscal 2024, primarily due to the devaluation of the Argentine peso. This included an **$8 million** loss from the sale of government-issued BOPREAL bonds used to settle foreign payables[15](index=15&type=chunk) - In fiscal 2024, the company initiated restructuring activities, including closing a reinforcing carbons unit in Tianjin, China, and idling an aerogel plant in Frankfurt, Germany. These actions resulted in charges of **$13 million** for the nine months ended June 30, 2024[31](index=31&type=chunk)[32](index=32&type=chunk) - The reserve for respirator-related liabilities was **$37 million** as of June 30, 2024, a slight decrease from **$38 million** at September 30, 2023[22](index=22&type=chunk) Segment EBIT - Nine Months Ended June 30 (in millions) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | **Reinforcement Materials** | $414 | $348 | | **Performance Chemicals** | $120 | $89 | | **Total Segment EBIT** | $534 | $437 | - On July 19, 2024, Cabot entered into agreements to purchase assets and license technology for its Battery Materials product line for **$27 million**, with the closing expected in the first quarter of fiscal 2025[47](index=47&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, attributing increased income in Q3 2024 to higher earnings across both Reinforcement Materials and Performance Chemicals segments, while also detailing liquidity, capital resources, and the Q4 outlook [Results of Operations—Consolidated](index=24&type=section&id=Results%20of%20Operations%E2%80%94Consolidated) Consolidated net sales for Q3 2024 increased by **$48 million**, driving gross profit up by **$33 million** in the quarter and **$106 million** for the nine-month period, despite rising operating expenses Financial Highlights (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $1,016 | $968 | $2,993 | $2,966 | | **Gross profit** | $256 | $223 | $720 | $614 | - The increase in gross profit for the nine months ended June 30, 2024, was driven by higher volumes (contributing **$58 million**) and higher unit margins (contributing **$44 million**) across both segments[52](index=52&type=chunk) - Selling and administrative expenses increased by **$26 million** for the nine months ended June 30, 2024, compared to the prior year, primarily due to higher incentive compensation expense[52](index=52&type=chunk) - Other expense increased by **$20 million** for the nine-month period, mainly due to higher foreign currency losses in Argentina following a government currency devaluation[55](index=55&type=chunk) [Results of Operations—By Business Segment](index=30&type=section&id=Results%20of%20Operations%E2%80%94By%20Business%20Segment) Total segment EBIT increased by **$27 million** in Q3 and **$97 million** for the nine-month period, driven by higher volumes and improved margins in Reinforcement Materials and favorable product mix in Performance Chemicals Reconciliation of Income Before Taxes to Total Segment EBIT (in millions) | Metric | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | | **Income before income taxes** | $394 | $324 | | **Less: Certain items** | ($56) | ($7) | | **Less: Other unallocated items** | ($84) | ($106) | | **Total segment EBIT** | $534 | $437 | Reinforcement Materials Performance (in millions) | Metric | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | | **Sales** | $1,966 | $1,939 | | **EBIT** | $414 | $348 | Performance Chemicals Performance (in millions) | Metric | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :--- | :--- | :--- | | **Sales** | $928 | $919 | | **EBIT** | $120 | $89 | - Outlook for Q4: Reinforcement Materials EBIT is expected to improve modestly from Q3. Performance Chemicals EBIT is expected to improve year-over-year but decline sequentially due to seasonality[64](index=64&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$197 million** in cash and **$1.2 billion** in borrowing availability, projecting fiscal 2024 capital expenditures between **$220 million** and **$240 million** - As of June 30, 2024, the company had **$197 million** in cash and cash equivalents and **$1.2 billion** available under its revolving credit agreements[65](index=65&type=chunk) - Capital expenditures for fiscal 2024 are expected to be between **$220 million** and **$240 million**[69](index=69&type=chunk) - The company expects the total capital cost to install EPA-mandated air pollution controls at its U.S. carbon black plants to be approximately **$250 million**, with about **$195 million** incurred as of June 30, 2024[70](index=70&type=chunk) - Financing activities in the first nine months of fiscal 2024 included **$106 million** in share repurchases and **$69 million** in dividend payments to stockholders[71](index=71&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk exposures compared to disclosures in its fiscal year 2023 Form 10-K - Information about market risks for the period ended June 30, 2024, does not differ materially from the discussion in the 2023 10-K[73](index=73&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[74](index=74&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[74](index=74&type=chunk) Part II [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 FY2024, Cabot repurchased **497,999 shares** of common stock at an average price of approximately **$100.40 per share** under its share repurchase program Issuer Purchases of Equity Securities (Quarter Ended June 30, 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 0 | N/A | | May 2024 | 250,000 | $101.66 | | June 2024 | 247,999 | $99.15 | | **Total** | **497,999** | **~$100.40** | [Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No directors or officers entered into, modified, or terminated Rule 10b5-1 trading plans during the third fiscal quarter of 2024 - No directors or officers entered into, modified, or terminated Rule 10b5-1 trading plans during the third fiscal quarter of 2024[77](index=77&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents, officer certifications, and XBRL data files - Key exhibits filed include officer certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL documents (Exhibits 101, 104)[78](index=78&type=chunk)

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 35% to $1.92 compared to the same period in fiscal 2023 [4][12] - Operating cash flow was strong at $207 million, with discretionary free cash flow of $128 million in Q3 [6][12] - The company ended the quarter with a cash balance of $197 million and a liquidity position of approximately $1.4 billion [13] Business Segment Data and Key Metrics Changes - EBIT in the Reinforcement Materials segment grew 3% year-over-year to $136 million, driven by higher pricing and improved product mix [5][14] - In the Performance Chemicals segment, EBIT increased by 72% year-over-year, supported by strong volume growth and a return to a more normalized product mix [5][16] Market Data and Key Metrics Changes - Global volumes in Reinforcement Materials were up 4% year-over-year, with 9% growth in Asia Pacific and Europe, while volumes in the Americas declined by 4% due to weather-related events [14][15] - The company noted robust demand in key end markets in China, including tires and automotive, despite a slower overall economic growth rate [21][22] Company Strategy and Development Direction - The company is focused on generating strong levels of discretionary free cash flow and maintaining a balanced capital allocation framework [10][11] - The management team is committed to high confidence, high return growth investments, including organic growth projects and potential bolt-on acquisitions [11] - The company plans to discuss its strategy and long-term financial targets at the upcoming Investor Day on December 4 [19][43] Management's Comments on Operating Environment and Future Outlook - Management raised the full-year outlook for adjusted earnings per share to a range of $7 to $7.10, reflecting strong commercial and operational execution [17][18] - The outlook for cash flow remains strong, sufficient to fund growth investments and return cash to shareholders [18] - Management expressed cautious optimism regarding the Chinese economy, noting stabilization but lower growth compared to historical levels [21][22] Other Important Information - The company achieved a platinum rating from EcoVadis for sustainability for the fourth consecutive year, placing it among the top 1% of companies assessed [6][8] - The company launched new sustainable products, including the REPLASBLAK universal circular black masterbatches [9] Q&A Session Summary Question: How far along are you on your rubber black contract discussions for next year? - Management indicated that contract negotiations are progressing consistent with historical patterns, beginning in late summer [20] Question: What is your read on the Chinese economy? - Management noted that the Chinese economy appears stabilized but at a lower growth level, with robust demand in key markets like tires and automotive [21][22] Question: What did the Altamira force majeure cost you in Q3? - The impact of weather events, including Altamira and flooding in Brazil, was approximately $5 million in the quarter [23] Question: Have you seen any material change in buying behavior post July 1 regarding Russian imports of carbon black into Europe? - Management confirmed a shortage of carbon black in the region due to sanctions, driving strong demand for local supply [24][25] Question: What is the level of earnings you are willing to underwrite moving forward? - Management expects quarterly EBIT in the Performance Chemicals segment to be in the range of $45 million to $55 million, depending on various factors [31] Question: How is the building and construction market affecting your fumed silica business? - Management stated that the building and construction market remains stable without significant improvement [32][33] Question: Are there any possible tariffs that might affect you regarding tires from China or other offshore areas? - Management noted existing tariffs on Chinese tires and the potential for more anti-dumping duties due to elevated import levels [39][40]