Key Takeaways CBT signs a multi-year supply agreement with PowerCo to provide advanced conductive carbons for EV batteries.CBT's materials are designed to boost conductivity with energy density, fast charging, and long battery life.Cabot is positioned as a key supplier to Europe's EV battery market and supports growth in battery materials.Cabot Corporation (CBT) has signed a multi-year supply pact with PowerCo SE, a leading European original equipment manufacturer in the electric vehicle (EV) battery sector ...

Financial Data and Key Metrics Changes - In fiscal year 2025, the company achieved record adjusted earnings per share of $7.25, a 3% increase year-over-year [13] - Adjusted EBITDA for the year was $804 million, up 3% year-over-year, with a margin of 22% [14] - The company generated operating cash flow of $665 million and free cash flow of $391 million [17] - The net debt to EBITDA ratio remained at 1.2x, with liquidity of $1.5 billion [15][27] Business Line Data and Key Metrics Changes - Reinforcement materials EBIT decreased by 5% year-over-year, while performance chemicals EBIT increased by 18% [13] - In the fourth quarter, EBIT for reinforcement materials decreased by $4 million due to a 5% decline in volumes [28] - Performance chemicals saw a decrease in EBIT by $2 million in the fourth quarter, primarily due to lower volumes in Europe [30] Market Data and Key Metrics Changes - Volumes in the Americas were down 7%, while Asia-Pacific volumes decreased by 6%, but Europe saw a 5% increase [28] - The company expects light vehicle auto production in North America and Europe to decline for a third consecutive year [33] - The demand for conductive carbons is projected to grow at approximately 8% through the end of the decade [21] Company Strategy and Development Direction - The company is focused on strategic growth areas such as battery materials and has entered into an agreement to acquire Bridgestone's reinforcing carbon plants in Mexico [19] - The company aims to maintain a balanced capital allocation framework, prioritizing asset maintenance, growth investments, and returning capital to shareholders [17] - Sustainability remains a core focus, with the company receiving a Platinum rating from EcoVadis for the fifth consecutive year [22] Management's Comments on Operating Environment and Future Outlook - The management highlighted a turbulent macroeconomic and geopolitical environment impacting demand, particularly in automotive and construction sectors [13][32] - For fiscal year 2026, adjusted earnings per share is expected to be between $6 and $7, reflecting uncertainty in demand and pricing pressures [34] - The management remains optimistic about growth in targeted applications despite challenges in traditional markets [37] Other Important Information - The company paid $96 million in dividends in fiscal year 2025, reflecting a 5% increase [18] - Share repurchases totaled $168 million, reducing the outstanding share count by 3% [18] - The company is transitioning its investor relations leadership, with Robert Rist stepping into the role of Vice President of Investor Relations [11] Q&A Session Summary Question: Are you seeing any volatility in your rubber-black operating rates regionally? - The company indicated that operating rates are largely stable, influenced by elevated tire imports impacting demand [46][47] Question: Are you being impacted at all by Dow's silicone rationalization efforts in Europe? - The company is in discussions with Dow regarding their siloxanes plant closure and its impact on their fume silica plant operations [48] Question: How much do you expect 2026 tire contract prices to be down? - The company has completed roughly 25% of its contracts, which is behind last year's pace, and is facing challenges in projecting demand expectations [51][53] Question: Could you elaborate on the performance chemicals guidance for this year? - The company expects certain applications in automotive and construction to improve over time, while targeted growth areas like battery materials are anticipated to perform well [55]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported a record-adjusted earnings per share (EPS) of $7.25, representing a 3% increase year over year [15] - Adjusted EBITDA for the year was $804 million, up 3% year over year, with a margin of 22% [16] - The company maintained a strong balance sheet, finishing fiscal 2025 with a net debt to EBITDA ratio of 1.2 times and liquidity of $1.5 billion [17][19] Business Line Data and Key Metrics Changes - Reinforcement materials EBIT decreased by 5% year over year, while performance chemicals EBIT increased by 18% [15] - In the fourth quarter, EBIT for reinforcement materials decreased by $4 million due to lower volumes, which were down 5% year over year [29] - Performance chemicals saw a $2 million decrease in EBIT in the fourth quarter compared to the previous year, primarily due to lower volumes in Europe [30] Market Data and Key Metrics Changes - Volumes in the Americas were down 7% and 6% in Asia-Pacific, while volumes in Europe were up 5% [29] - The company noted that the automotive and construction sectors are currently in a cyclical trough, impacting demand [36] - Demand for conductive carbons is expected to grow in the 8% range through the end of the decade, driven by power generation and distribution [23] Company Strategy and Development Direction - The company is focused on three capital allocation priorities: maintaining asset reliability, pursuing high-confidence growth investments, and returning capital to shareholders [19] - An acquisition of Bridgestone's reinforcing carbon plants in Mexico is expected to close in the second fiscal quarter and be accretive in the first year [21] - The company is pursuing a bifurcation strategy with tailored approaches to China and a focus on Western geographies [25] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about the macroeconomic environment, geopolitical issues, and global trade turbulence impacting demand [15][32] - For fiscal year 2026, adjusted EPS is expected to be between $6 and $7, reflecting uncertainty in end market demand and pricing pressures [33] - The management highlighted the importance of operational excellence and cost optimization in navigating the current challenges [42] Other Important Information - The company paid $96 million in dividends in fiscal year 2025, reflecting a 5% increase announced in May [20] - The company repurchased $168 million of shares, reducing the outstanding share count by 3% [20] - The company received a Platinum rating from EcoVadis for sustainability, placing it among the top 1% of companies in the manufacturing of basic chemicals [24] Q&A Session Summary Question: Are you seeing any volatility in your rubber-black operating rates regionally, or is it relatively stable? - The company indicated that operating rates are largely stable, despite elevated tire imports impacting demand [44] Question: How much do you expect 2026 tire contract prices to be down or expectations by region? - Approximately 25% of contracts have been completed, which is behind last year's pace, and the company is unable to comment on final outcomes due to ongoing negotiations [46] Question: Could you elaborate on the performance chemicals, the underlying assumptions for guidance? - The company expects certain applications in automotive and construction to improve over time, but anticipates limited material improvement into 2026 [47] Question: How did regional utilization rates perform during the quarter? - Utilization rates in North America are between 75% and 80%, higher in Europe at around 85%, while South America remains lower due to tire imports [50]

Financial Data and Key Metrics Changes - The company reported Q3 adjusted earnings per share of $1.90, which is down 1% compared to the same period last year and in line with Q2 results [6][17] - Operating cash flow for the quarter was strong at $249 million, which included a working capital decrease of $101 million [17][18] - Discretionary free cash flow was $114 million, with a cash balance of $239 million at the end of the quarter [18] Business Segment Data and Key Metrics Changes - EBIT for Reinforcement Materials was $128 million, a decrease of $8 million year over year, primarily due to an 8% decline in global volumes [19][20] - Performance Chemicals saw EBIT increase by $2 million year over year, driven by higher gross profit per ton despite an 8% decline in global volumes [21][22] Market Data and Key Metrics Changes - In the Americas, volumes for Reinforcement Materials were down 9% year over year, with Asia Pacific down 11% and Europe up 4% [20] - The battery materials segment increased contribution margin by 20% compared to the same period last year, with a focus on differentiating products for the EV market [11][12] Company Strategy and Development Direction - The company announced the acquisition of Bridgestone's reinforcing carbons plant in Mexico for $70 million, which is expected to be accretive in the first year [8][9] - Sustainability remains a core focus, with the company receiving a platinum rating from EcoVadis for the fifth consecutive year, placing it among the top 1% of companies in the basic chemicals manufacturing sector [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macroeconomic environment, reaffirming the full-year adjusted earnings per share guidance of $7.15 to $7.50 [27][29] - The company is focused on executing its operating platform of commercial and operational excellence to address uncertainties from tariffs and global demand [28][29] Other Important Information - Capital expenditures for the fiscal year are expected to be between $250 million to $275 million, with $61 million spent in Q3 [18][25] - The company plans to repurchase between $150 million to $200 million of shares in fiscal 2025 [25][24] Q&A Session Summary Question: Relationship between tariffs and demand in North America - Management discussed the dynamic nature of tariffs, noting that passenger car tires from Southeast Asia have tariffs in the 19% to 29% range, while those from China are around 70% [34][35] Question: Differences in volumes between North America and South America - Volumes in the Americas were down 9%, with North America and South America experiencing different impacts due to market conditions and contract season losses [42][43] Question: Impact of tariffs on tire imports and local production - Management indicated that tariffs are expected to enhance the competitiveness of local production, although the timing and magnitude of these effects are uncertain [36][54] Question: Carbon black price negotiations in North America - Early stages of contract negotiations for carbon black prices are underway, following typical seasonal patterns [48] Question: Inventory levels in the tire market - Management noted that tire inventories appear balanced, with some budget brands having elevated levels, but overall, the situation seems to be stabilizing [52][53] Question: Operating leverage from network optimization initiatives - Management explained that network optimization efforts are broad and aimed at improving product mix and cost efficiency, which should favorably impact operating leverage [61][62]

Financial Data and Key Metrics Changes - The company reported Q3 adjusted earnings per share of $1.9, which was down 1% compared to the same period last year and in line with Q2 results [6][16] - Operating cash flow for the quarter was strong at $249 million, funding capital expenditures and enabling $64 million returned to shareholders [7][17] - The company’s cash balance at the end of the quarter was $239 million, with a liquidity position of approximately $1.4 billion [17] Business Segment Data and Key Metrics Changes - Reinforcement Materials segment EBIT was $128 million, down $8 million year over year, primarily due to an 8% decline in global volumes [18][19] - Performance Chemicals segment EBIT increased by $2 million year over year, driven by higher gross profit per ton, despite an 8% decline in global volumes [20] Market Data and Key Metrics Changes - Volumes in Asia Pacific were down 11%, while volumes in The Americas decreased by 9%, with Europe experiencing a 4% increase [19] - The battery materials segment saw a 20% increase in contribution margin compared to the same period last year, with a focus on differentiating products for the EV market [11][12] Company Strategy and Development Direction - The company announced an acquisition of Bridgestone's reinforcing carbons plant in Mexico for $70 million, expected to be accretive in the first year [7][9] - Sustainability is a core focus, with the company receiving a platinum rating from EcoVadis for its sustainability leadership [10] - The company aims to build a leadership position in battery materials, targeting high-value segments in both China and Western economies [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging macroeconomic environment, reaffirming the full-year EPS guidance of $7.15 to $7.5 [27][29] - The company is focused on executing operational excellence and optimizing its supply chain to mitigate the impacts of tariffs and lower demand [28][29] Other Important Information - The company expects to maintain a competitive dividend yield and has plans for share repurchases between $150 million to $200 million in fiscal 2025 [25][29] - The company has completed a new unit in Indonesia and expanded CNT capacity in China, supporting its growth strategy [25] Q&A Session Summary Question: Relationship between tariffs and demand in North America - Management discussed the dynamic nature of tariffs, noting that passenger car tires from Southeast Asia have tariffs in the 19% to 29% range, while those from China are around 70% [34][35] Question: Volume differences in The Americas - Management confirmed that volumes in The Americas were down 9% year over year, with North America and South America experiencing different market conditions [41][42] Question: Impact of tariffs on inventory levels - Management indicated that tire inventories appear balanced, with some budget brands having elevated levels, but overall, the situation seems to be stabilizing [54][55] Question: Network optimization initiatives - Management explained that network optimization efforts are broad and aimed at improving product mix and cost efficiency, which should favorably impact operating leverage [63][66] Question: Corporate cost reductions - Management attributed a $12 million improvement in unallocated corporate costs to a mix of headcount actions and lower third-party spending [69][70] Question: Carbon black volumes in The Americas - Management noted that elevated tire imports have negatively impacted local production levels, but there are signs of stabilization and potential improvement in the future [73][75]