Cabot (CBT) - 2025 Q3 - Quarterly Report

Part I. Financial Information This part presents Cabot Corporation's unaudited financial statements and related disclosures Item 1. Financial Statements (unaudited) Cabot Corporation's unaudited consolidated financial statements and notes for Q3 and 9M FY25 and FY24 are presented Consolidated Statements of Operations This section provides Cabot Corporation's unaudited consolidated statements of operations for the specified interim periods Key Operating Results | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net sales and other operating revenues | $923 | $1,016 | $2,814 | $2,993 | | Gross profit | $244 | $256 | $720 | $720 | | Income (loss) from operations | $167 | $172 | $484 | $464 | | Net income (loss) attributable to Cabot Corporation | $101 | $109 | $288 | $243 | | Basic EPS | $1.87 | $1.96 | $5.27 | $4.34 | | Diluted EPS | $1.86 | $1.94 | $5.22 | $4.30 | Consolidated Statements of Comprehensive Income (Loss) This section presents Cabot Corporation's unaudited consolidated statements of comprehensive income (loss) Key Comprehensive Income Metrics | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income (loss) | $113 | $120 | $322 | $278 | | Other comprehensive income (loss), net of tax | $76 | $(66) | $5 | $(21) | | Comprehensive income (loss) attributable to Cabot Corporation | $173 | $44 | $293 | $223 | Consolidated Balance Sheets This section details Cabot Corporation's unaudited consolidated balance sheets as of June 30, 2025, and September 30, 2024 Balance Sheet Assets Summary | Asset Category | June 30, 2025 (In millions) | September 30, 2024 (In millions) | | :-------------------------------- | :---------------------------- | :------------------------------- | | Cash and cash equivalents | $239 | $223 | | Total current assets | $1,573 | $1,605 | | Net property, plant and equipment | $1,672 | $1,534 | | Goodwill | $133 | $133 | | Total assets | $3,837 | $3,736 | Balance Sheet Liabilities and Equity Summary | Liability & Equity Category | June 30, 2025 (In millions) | September 30, 2024 (In millions) | | :---------------------------------- | :---------------------------- | :------------------------------- | | Total current liabilities | $740 | $772 | | Long-term debt | $1,105 | $1,087 | | Total Cabot Corporation stockholders' equity | $1,541 | $1,425 | | Total stockholders' equity | $1,683 | $1,590 | | Total liabilities and stockholders' equity | $3,837 | $3,736 | Consolidated Statements of Cash Flows This section outlines Cabot Corporation's unaudited consolidated statements of cash flows for the specified interim periods Cash Flow Summary | Cash Flow Activity | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash provided by (used in) operating activities | $446 | $488 | | Cash provided by (used in) investing activities | $(239) | $(146) | | Cash provided by (used in) financing activities | $(190) | $(326) | | Increase (decrease) in cash and cash equivalents | $16 | $(41) | | Cash and cash equivalents at end of period | $239 | $197 | Consolidated Statements of Changes in Stockholders' Equity This section presents Cabot Corporation's unaudited consolidated statements of changes in stockholders' equity Stockholders' Equity Changes (FY25) | Metric | Balance at September 30, 2024 (In millions) | Balance at June 30, 2025 (In millions) | | :------------------------------------ | :------------------------------------------ | :--------------------------------------- | | Total Cabot Corporation Stockholders' Equity | $1,425 | $1,541 | | Total Stockholders' Equity | $1,590 | $1,683 | Stockholders' Equity Changes (FY24) | Metric | Balance at September 30, 2023 (In millions) | Balance at June 30, 2024 (In millions) | | :------------------------------------ | :------------------------------------------ | :--------------------------------------- | | Total Cabot Corporation Stockholders' Equity | $1,264 | $1,346 | | Total Stockholders' Equity | $1,407 | $1,496 | Notes to the Consolidated Financial Statements This section provides detailed notes to Cabot Corporation's unaudited consolidated financial statements A. Basis of Presentation The consolidated financial statements are prepared in accordance with U.S. GAAP and reflect management's adjustments - The financial statements are unaudited and prepared in conformity with U.S. GAAP, including wholly-owned and majority-owned subsidiaries[26] - Interim results are not necessarily indicative of full fiscal year results[28] B. Significant Accounting Policies This note details significant accounting policies, including Argentina's economy impact and recent FASB pronouncements - Argentina's highly inflationary economy resulted in foreign exchange losses of $3 million (Q3 FY25) and $5 million (9M FY25), compared to $2 million (Q3 FY24) and $42 million (9M FY24)[30] - In fiscal 2024, the Company purchased $30 million in BOPREAL bonds, selling them for $22 million, resulting in an $8 million investment loss[31] - The U.S. federal government enacted the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, with impact on deferred tax assets being evaluated[32] - New FASB standards on Expense Disaggregation, Income Tax, and Reportable Segment Disclosures are being evaluated for their impact[33][34][35] C. Acquisitions In October 2024, Cabot acquired assets and licensed technology for its Battery Materials product line for $27 million - In October 2024, the Company acquired assets and licensed technology for its Battery Materials product line for $27 million[36] - The acquisition cost was allocated as $19 million to property, plant and equipment and $8 million to intangible assets[36] D. Goodwill and Intangible Assets Goodwill remained stable, while intangible assets increased due to an acquisition, with related amortization expense Goodwill by Segment | Segment | Balance at September 30, 2024 (In millions) | Foreign Currency Impact (In millions) | Balance at June 30, 2025 (In millions) | | :-------------------- | :------------------------------------------ | :------------------------------------ | :--------------------------------------- | | Reinforcement Materials | $48 | $1 | $49 | | Performance Chemicals | $85 | $(1) | $84 | | Total Goodwill | $133 | $0 | $133 | Net Intangible Assets | Intangible Asset Type | Net Intangible Assets June 30, 2025 (In millions) | Net Intangible Assets September 30, 2024 (In millions) | | :-------------------------- | :------------------------------------------------ | :--------------------------------------------------- | | Developed technologies | $27 | $22 | | Trademarks | $1 | $1 | | Customer relationships | $28 | $30 | | Total Intangible Assets | $56 | $53 | - Amortization expense was $2 million for the three months ended June 30, 2025 (vs. $1 million in 2024) and $5 million for the nine months ended June 30, 2025 (vs. $4 million in 2024)[37] E. Accumulated Other Comprehensive Income (Loss) ("AOCI") AOCI improved due to foreign currency translation, with minimal reclassifications to operations AOCI Components | AOCI Component | Balance at Sep 30, 2024 (In millions) | Balance at June 30, 2025 (In millions) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Currency Translation Adjustment | $(342) | $(337) | | Pension and Other Post-retirement Benefit Liability Adjustments | $(18) | $(18) | | Total AOCI attributable to Cabot Corporation | $(360) | $(355) | - Other comprehensive income (loss) before reclassifications for the three months ended June 30, 2025, was $76 million, primarily from foreign currency translation adjustment[38] F. Contingencies Cabot maintains a reserve for respirator liabilities, acknowledging litigation unpredictability and potential material changes - Cabot holds a $34 million reserve at June 30, 2025 (vs. $35 million at Sep 30, 2024) for respirator liability claims[41] - The estimate for respirator liabilities is subject to significant uncertainties, with potential for material changes in the near term[42] - Other ordinary course lawsuits and claims are not expected to materially affect the Company's financial position[43] G. Income Tax Effective tax rates and income tax provisions are detailed, including discrete tax expenses and uncertain tax positions Income Tax Provision and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | (Provision) benefit for income taxes | $(43) million | $(40) million | $(133) million | $(121) million | | Effective tax rate | 28% | 25% | 29% | 31% | - The provision for income taxes included net discrete tax expense of $1 million for Q3 FY25 and $10 million for 9M FY25[44] - Cabot released uncertain tax positions of $1 million (Q3 FY25) and $3 million (9M FY25) due to statute of limitations expirations[49] H. Earnings Per Share Basic and diluted EPS calculations are presented, accounting for participating securities entitled to dividend equivalents Earnings Per Share Data | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $1.87 | $1.96 | $5.27 | $4.34 | | Diluted EPS | $1.86 | $1.94 | $5.22 | $4.30 | | Net income (loss) attributable to Cabot Corporation (numerator) | $101 million | $109 million | $288 million | $243 million | | Adjusted weighted average common shares (denominator) - Basic | 53.5 million | 55.1 million | 53.9 million | 55.3 million | | Adjusted weighted average common shares (denominator) - Diluted | 53.8 million | 55.7 million | 54.4 million | 55.8 million | - Participating securities, including unvested restricted stock units, are entitled to cash dividend equivalents[51] I. Financial Instruments and Fair Value Measurements Financial instruments are classified by fair value hierarchy, with cash as Level 1 and derivatives/debt as Level 2 - Cash and cash equivalents, accounts receivable, and payables approximate carrying values and are classified as Level 1[54] - Derivatives (net investment hedges, forward foreign currency contracts) and guaranteed investment contracts are classified as Level 2 instruments, with fair values based on observable inputs[55][57] - The fair value of long-term fixed rate debt was $1.10 billion at June 30, 2025 (carrying value $1.09 billion), classified as Level 2[58] J. Supplier Financing Programs Cabot uses supplier financing programs, with outstanding obligations decreasing to $13 million at June 30, 2025 - Outstanding payment obligations under supplier financing programs were $13 million as of June 30, 2025, down from $16 million as of September 30, 2024[59] - These programs enable suppliers to sell receivables to third-party financial institutions for earlier payment[59] K. Financial Information by Segment Cabot's two reportable segments, Reinforcement Materials and Performance Chemicals, are analyzed by revenue and EBIT - Cabot operates two reportable segments: Reinforcement Materials (reinforcing carbons, engineered elastomer composites) and Performance Chemicals (specialty carbons, fumed metal oxides, battery materials, etc.)[61] Segment Revenue | Segment | Q3 FY25 Revenue (In millions) | Q3 FY24 Revenue (In millions) | 9M FY25 Revenue (In millions) | 9M FY24 Revenue (In millions) | | :-------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Reinforcement Materials | $573 | $649 | $1,778 | $1,966 | | Performance Chemicals | $320 | $332 | $942 | $928 | | Consolidated Total | $893 | $981 | $2,720 | $2,894 | Segment EBIT | Segment | Q3 FY25 EBIT (In millions) | Q3 FY24 EBIT (In millions) | 9M FY25 EBIT (In millions) | 9M FY24 EBIT (In millions) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Reinforcement Materials | $128 | $136 | $389 | $414 | | Performance Chemicals | $57 | $55 | $152 | $120 | | Consolidated Total | $185 | $191 | $541 | $534 | Consolidated Revenue by Geographic Region | Geographic Region | Q3 FY25 Consolidated Revenue (In millions) | Q3 FY24 Consolidated Revenue (In millions) | 9M FY25 Consolidated Revenue (In millions) | 9M FY24 Consolidated Revenue (In millions) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Americas | $328 | $368 | $997 | $1,077 | | Asia Pacific | $331 | $377 | $1,059 | $1,132 | | Europe, Middle East and Africa | $234 | $236 | $664 | $685 | | Net sales and other operating revenues | $923 | $1,016 | $2,814 | $2,993 | L. Subsequent Event Cabot agreed to acquire Bridgestone's carbon black facility in Mexico for $70 million, expected to close in fiscal 2026 - On August 4, 2025, Cabot agreed to purchase Bridgestone Corporation's carbon black manufacturing facility in Mexico for approximately $70 million[69] - The acquisition is expected to close in the first half of fiscal 2026, subject to regulatory approval[69] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Cabot's financial condition, operating results, liquidity, and forward-looking statements Recently Issued Accounting Pronouncements This section refers to Note B for details on recently issued accounting pronouncements - Refer to Note B for details on recent accounting pronouncements[71] Results of Operations This section analyzes Cabot's operational performance, including consolidated and segment-specific financial results and non-GAAP measures Definition of Terms and Non-GAAP Financial Measures Key terms and non-GAAP financial measures like 'operating tax rate' and 'Total segment EBIT' are defined for performance evaluation - The 'operating tax rate' is a non-GAAP measure excluding specific tax items and timing of losses[74] - 'Total segment EBIT' is a non-GAAP measure used by management to evaluate segment operating results and allocate resources[75] - Management believes Total segment EBIT provides useful supplemental information for investors[75] Overview Income before income taxes decreased in Q3 FY25 due to lower Reinforcement Materials EBIT, partially offset by other factors - Income (loss) before income taxes and equity in earnings of affiliated companies decreased in Q3 FY25 compared to Q3 FY24[78] - The decrease was primarily due to lower Reinforcement Materials EBIT, partially offset by lower unallocated corporate costs and higher Performance Chemicals EBIT[78] Third quarter of Fiscal 2025 versus Third quarter of Fiscal 2024—Consolidated Consolidated results show decreased net sales and gross profit in Q3, but increased net income for 9M, influenced by Argentina losses Net Sales and Other Operating Revenues and Gross Profit Net sales and gross profit decreased in Q3 FY25 due to lower volumes and less favorable pricing/product mix Consolidated Revenue and Gross Profit | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net sales and other operating revenues | $923 | $1,016 | $2,814 | $2,993 | | Gross profit | $244 | $256 | $720 | $720 | - Net sales and other operating revenues decreased by $93 million (Q3 FY25 vs. Q3 FY24) and $179 million (9M FY25 vs. 9M FY24)[79] - Q3 FY25 revenue decrease was driven by lower volumes in both segments ($66 million) and less favorable pricing/product mix in Reinforcement Materials ($27 million)[80] - 9M FY25 revenue decrease was due to lower Reinforcement Materials volumes ($94 million), less favorable pricing/product mix ($92 million), and unfavorable foreign currency translation ($23 million)[81] - Gross profit decreased by $12 million in Q3 FY25 due to lower volumes ($25 million), partially offset by higher gross profit per ton ($9 million)[82][83] Selling and Administrative Expenses Selling and administrative expenses decreased in Q3 and 9M FY25 due to effective cost management efforts Selling and Administrative Expenses | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Selling and administrative expenses | $62 | $68 | $192 | $210 | - Selling and administrative expenses decreased by $6 million (Q3 FY25) and $18 million (9M FY25) due to cost management efforts[84] Research and Technical Expenses Research and technical expenses decreased in both Q3 and 9M FY25, reflecting cost control measures Research and Technical Expenses | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :---------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Research and technical expenses | $15 | $16 | $44 | $46 | - Research and technical expenses decreased by $1 million in Q3 FY25 and $2 million in 9M FY25[85] Interest and Dividend Income, Interest Expense and Other Income (Expense) Interest and dividend income decreased, while interest expense was flat in Q3 and decreased in 9M, with improved other income Interest and Other Income/Expense | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Interest and dividend income | $7 | $8 | $20 | $25 | | Interest expense | $(19) | $(19) | $(56) | $(62) | | Other income (expense) | $0 | $(3) | $2 | $(33) | - Interest and dividend income decreased by $1 million (Q3 FY25) and $5 million (9M FY25) due to lower average interest rates[86] - Interest expense remained flat in Q3 FY25 and decreased by $6 million in 9M FY25 due to lower average interest rates on short-term borrowings[87] - Other income (expense) improved by $3 million (Q3 FY25) and $35 million (9M FY25) primarily due to lower foreign exchange losses in Argentina[88] (Provision) Benefit for Income Taxes and Reconciliation of Effective Tax Rate to Operating Tax Rate Effective tax rates and provisions are detailed, with the operating tax rate expected to be 27% to 29% for fiscal 2025 Income Tax Rates | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Effective tax rate | 28% | 25% | 29% | 31% | | Operating tax rate | 28% | 27% | 28% | 28% | - The Q3 FY25 tax provision was $43 million (vs. $40 million in Q3 FY24), primarily due to the mix of earnings[89] - The 9M FY25 tax provision was $133 million (vs. $121 million in 9M FY24), primarily due to higher earnings[90] - The Company expects its fiscal 2025 Operating tax rate to be in the range of 27% to 29%[91] Net Income (Loss) Attributable to Noncontrolling Interests Equity in earnings from affiliates decreased in Q3, while net income attributable to noncontrolling interests varied Noncontrolling Interests Data | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Equity in earnings of affiliated companies, net of tax | $1 | $2 | $5 | $5 | | Net income (loss) attributable to noncontrolling interests, net of tax | $12 | $11 | $34 | $35 | - Equity in earnings of affiliated companies, net of tax, decreased by $1 million in Q3 FY25 due to lower profitability of the Venezuelan affiliate[92] - Net income attributable to noncontrolling interests increased by $1 million in Q3 FY25 but decreased by $1 million in 9M FY25[93] Net Income Attributable to Cabot Corporation Net income attributable to Cabot Corporation decreased in Q3 but increased in 9M, influenced by segment EBIT and Argentina losses Net Income and Diluted EPS | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income (loss) attributable to Cabot Corporation | $101 | $109 | $288 | $243 | | Diluted EPS | $1.86 | $1.94 | $5.22 | $4.30 | - Net income attributable to Cabot Corporation decreased by $8 million in Q3 FY25, primarily due to lower Reinforcement Materials Segment EBIT[94] - Net income attributable to Cabot Corporation increased by $45 million in 9M FY25, primarily due to lower Argentina controlled currency devaluation and other losses[95] Third quarter of Fiscal 2025 versus Third quarter of Fiscal 2024—By Business Segment Segment performance shows decreased Reinforcement Materials sales/EBIT and varied Performance Chemicals results, with certain items excluded Certain Items Certain items, excluded from segment results, totaled $(3) million in Q3 FY25 and $(13) million in 9M FY25 Certain Items Impact | Certain Item | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Global restructuring activities | $(3) | $(1) | $(6) | $(13) | | Legal and environmental matters and reserve | $0 | $0 | $(6) | $(1) | | Argentina controlled currency devaluation and other losses | $0 | $(2) | $0 | $(43) | | Other certain items | $0 | $1 | $(1) | $1 | | Total certain items | $(3) | $(2) | $(13) | $(56) | - Certain items, which management excludes from ongoing segment results, totaled $(3) million in Q3 FY25 and $(13) million in 9M FY25[98] - A significant decrease in Argentina controlled currency devaluation and other losses from $(43) million (9M FY24) to $0 (9M FY25) was a key factor[98] Other Unallocated Items Total other unallocated items decreased in Q3 and 9M FY25, primarily due to lower corporate costs Other Unallocated Items Impact | Other Unallocated Item | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Interest expense | $(19) | $(19) | $(56) | $(62) | | Unallocated corporate costs | $(13) | $(16) | $(39) | $(51) | | General unallocated income (expense) | $6 | $6 | $22 | $34 | | Less: Equity in earnings of affiliated companies, net of tax | $1 | $2 | $5 | $5 | | Total other unallocated items | $(27) | $(31) | $(78) | $(84) | - Total other unallocated items decreased by $4 million in Q3 FY25 and $6 million in 9M FY25, primarily due to lower unallocated corporate costs and general unallocated income (expense)[98][99] Reinforcement Materials Reinforcement Materials sales and EBIT decreased due to lower volumes and less favorable pricing/product mix Reinforcement Materials Performance | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Reinforcement Materials Sales | $573 | $649 | $1,778 | $1,966 | | Reinforcement Materials EBIT | $128 | $136 | $389 | $414 | - Q3 FY25 sales decreased by $76 million due to lower volumes ($51 million) and less favorable pricing/product mix ($27 million), driven by lower customer demand in Americas and Asia Pacific[101] - 9M FY25 sales decreased by $188 million due to lower volumes ($94 million), less favorable pricing/product mix ($66 million), and unfavorable foreign currency translation ($23 million)[102] - Q3 FY25 EBIT decreased by $8 million due to lower volumes ($21 million), partially offset by lower selling and administrative expenses ($6 million) and higher gross profit per ton ($5 million)[103] - For Q4 FY25, Reinforcement Materials EBIT is expected to modestly decline due to higher sequential costs, partially offset by higher volumes in Asia Pacific[105] Performance Chemicals Performance Chemicals sales decreased in Q3 but EBIT increased due to higher gross profit per ton and cost management Performance Chemicals Performance | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :---------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Performance Chemicals Sales | $320 | $332 | $942 | $928 | | Performance Chemicals EBIT | $57 | $55 | $152 | $120 | - Q3 FY25 sales decreased by $12 million due to lower volumes ($15 million), partially offset by favorable foreign currency translation ($3 million), mainly from lower customer demand in auto-related applications[106] - 9M FY25 sales increased by $14 million due to higher volumes ($35 million), primarily in fumed metal oxides, partially offset by less favorable pricing/product mix ($25 million)[107][108] - Q3 FY25 EBIT increased by $2 million due to higher gross profit per ton ($4 million) from cost management, targeted price increases, and optimization[109] - Dow's cessation of polysiloxane operations by mid-2026 will impact chlorosilane feedstock supply, with discussions ongoing[111] - For Q4 FY25, Performance Chemicals EBIT is expected to decline due to lower seasonal volumes and higher sequential costs[112] Liquidity and Capital Resources Cabot's liquidity decreased in 9M FY25, with cash flows from operating, investing, and financing activities detailed Overview Liquidity decreased by $36 million in 9M FY25, with $239 million cash and $1.1 billion borrowing availability - Liquidity, measured by cash and borrowing availability, decreased by $36 million in 9M FY25[113] - As of June 30, 2025, the Company had $239 million in cash and cash equivalents and $1.1 billion in borrowing availability under revolving credit agreements[113] - Cabot complied with debt covenants, requiring a consolidated net debt to consolidated EBITDA ratio not to exceed 3.50 to 1.00[114] - The Company uses U.S. earnings, foreign repatriations, commercial paper, and U.S. Credit Agreement borrowings to meet U.S. cash needs[115] Cash Flows from Operating Activities Cash provided by operating activities decreased by $42 million in 9M FY25, driven by business earnings and working capital Operating Cash Flow | Metric | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash provided by (used in) operating activities | $446 | $488 | - Cash provided by operating activities decreased by $42 million in 9M FY25, driven by business earnings, depreciation/amortization ($114 million), cash dividends from equity investments ($13 million), and an increase in net working capital ($13 million)[121] Cash Flows from Investing Activities Investing activities consumed $239 million in 9M FY25, primarily for capital expenditures and an asset acquisition Investing Cash Flow | Metric | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash provided by (used in) investing activities | $(239) | $(146) | - Investing activities consumed $239 million in 9M FY25, including $210 million for capital expenditures and $27 million for an asset acquisition[124] - Capital expenditures for fiscal 2025 are expected to be between $250 million and $275 million[125] Cash Flows from Financing Activities Financing activities consumed $190 million in 9M FY25, mainly for share repurchases and dividends Financing Cash Flow | Metric | Nine Months Ended June 30, 2025 (In millions) | Nine Months Ended June 30, 2024 (In millions) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash provided by (used in) financing activities | $(190) | $(326) | - Financing activities consumed $190 million in 9M FY25, primarily due to share repurchases ($129 million), dividends to stockholders ($71 million), and dividends to noncontrolling interests ($57 million)[127] - In 9M FY24, financing activities consumed $326 million, mainly from commercial paper repayment ($123 million), share repurchases ($106 million), and dividends ($69 million to stockholders, $27 million to noncontrolling interests)[128] Forward-Looking Information Forward-looking statements regarding future performance are subject to various risks and uncertainties beyond the Company's control - The report contains forward-looking statements about future business performance, including EBIT, volumes, costs, and the impact of the OBBBA and the relationship with Dow[129] - Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors beyond the Company's control[130] - Key risk factors include industry competition, safety/health/environmental requirements, climate change risks, volatility in energy/raw material prices, customer/joint venture relationships, new product growth, economic conditions, litigation, interest/tax rates, and currency fluctuations[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures for Q3 FY25 are consistent with those in the 2024 10-K, with no material changes - Market risk disclosures for the period ended June 30, 2025, are consistent with those in the 2024 10-K[132] Item 4. Controls and Procedures Disclosure controls were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[133] - No material changes to internal controls over financial reporting occurred during the quarter ended June 30, 2025[134] Part II. Other Information This part contains other information, including equity security sales, other disclosures, exhibits, and signatures Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Cabot repurchased 533,333 shares in Q3 FY25, with significant remaining authorization for future repurchases Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | May 1, 2025 - May 31, 2025 | 510,000 | $75.06 | | June 1, 2025 - June 30, 2025 | 23,333 | $73.74 | | Total | 533,333 | - | - As of June 30, 2025, 9,955,759 shares may yet be purchased under publicly announced plans or programs[135] - The Board of Directors authorized additional repurchases of ten million shares on July 13, 2018, and December 3, 2024, with no set expiration dates[137] Item 5. Other Information No directors or officers engaged in Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 FY25 - No directors or officers entered into, modified, or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[136] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and executive certifications - The exhibits include corporate governance documents (Restated Certificate of Incorporation, By-laws), certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents[138] SIGNATURES The report is signed by Cabot Corporation's EVP and CFO, and VP, Chief Accounting Officer and Controller, on August 5, 2025 - The report is signed by Erica McLaughlin, Executive Vice President and Chief Financial Officer, and Lisa M. Dumont, Vice President, Chief Accounting Officer and Controller[144] - The signing date for the report is August 5, 2025[144]