Diluted earnings per share (“EPS”) of $0.88 and
Adjusted EPS of $1.56
Cabot Corporation (NYSE: CBT) today announced results for its
first quarter of fiscal year 2024.
Key Highlights
- Reinforcement Materials segment EBIT of $129 million; up 37%
compared to the same quarter in the prior year
- Performance Chemicals segment EBIT of $34 million; up 17%
year over year
- Finalized calendar year 2024 Reinforcement Materials
customer agreements with price and product mix improvements in all
regions
- Cash Flows from Operations of $105 million in the fiscal
first quarter supported the return of $55 million of cash to
shareholders in the quarter through $22 million in dividends and
$33 million in share repurchases
- Recognized by Newsweek as one of America’s Most Responsible
Companies 2024 for the fifth consecutive year
(In millions, except per share
amounts)
Three Months Ended
12/31/23
12/31/22
Net sales and other operating revenues
$
958
$
965
Net income (loss) attributable to Cabot
Corporation
$
50
$
54
Net earnings (loss) per share attributable
to Cabot Corporation
$
0.88
$
0.93
Less: Certain items after tax per
share
$
(0.68)
$
(0.05)
Adjusted EPS
$
1.56
$
0.98
Sean Keohane, Cabot President and Chief Executive Officer,
commented on the quarter, “We continued to execute against our
Creating for Tomorrow strategy and build momentum, delivering
another quarter of strong adjusted EPS. The Cabot team demonstrated
operational excellence and agility in a weak market environment,
resulting in adjusted EPS of $1.56, up 59% year-over-year and
in-line with our expectations. Reinforcement Materials continued to
demonstrate its resilience, delivering EBIT of $129 million driven
by price and product mix improvements and volume growth as compared
to the first quarter of fiscal 2023. In addition, we successfully
concluded our calendar year 2024 customer negotiations with pricing
and product mix improvements in all regions. EBIT in the
Performance Chemicals segment grew 17% year over year largely due
to improved volumes.”
Keohane continued, “During the first quarter, we delivered
strong operating cash flow of $105 million, and we returned cash to
our shareholders with $22 million of dividends and $33 million of
share repurchases. Our balance sheet remained strong with
approximately $1.2 billion of liquidity as of quarter end.”
Financial Detail
For the first quarter of fiscal 2024, net income attributable to
Cabot Corporation was $50 million ($0.88 per diluted common share).
Net income reflects an after-tax per share charge from certain
items of $0.68. Adjusted EPS for the first quarter of fiscal 2024
was $1.56 per share.
Segment Results
Reinforcement Materials – First quarter fiscal 2024 EBIT
in Reinforcement Materials increased by $35 million compared to the
first quarter of fiscal 2023. The increase in EBIT was principally
driven by improved unit margins from higher pricing and improved
product mix in our calendar year 2023 customer agreements and by
higher volumes in Europe and Asia.
Global and regional volume changes for Reinforcement Materials
for the first quarter of fiscal 2024 as compared to the same
quarter of the prior year are set forth in the table below:
First Quarter
Year-over-Year Change
Global Reinforcement Materials
Volumes
2%
Asia
7%
Europe, Middle East, Africa
11%
Americas
(7%)
Performance Chemicals – First quarter fiscal 2024 EBIT in
Performance Chemicals increased by $5 million compared to the first
quarter of fiscal 2023 primarily due to 10% higher volumes. Higher
volumes were driven by increases in the specialty carbons,
specialty compounds and fumed metal oxides product lines.
Cash Performance – The Company ended the first
quarter of fiscal 2024 with a cash balance of $244 million. During
the first quarter of fiscal 2024, cash flows from operating
activities were a source of $105 million. Capital expenditures for
the first quarter of fiscal 2024 were $54 million. Additional uses
of cash during the first quarter included $22 million for the
payment of dividends and $33 million for share repurchases.
Taxes – During the first quarter of fiscal 2024, the
Company recorded a tax expense of $34 million with an effective tax
rate of 36%. The operating tax rate in the first quarter of fiscal
2024 was 28%, which reflected $4 million of non-GAAP tax
adjustments. Our operating tax rate for fiscal 2024 is expected to
be in the range of 28% to 30%.
Outlook
Commenting on the outlook for the Company, Keohane said, “As we
look ahead to the remainder of fiscal 2024, our outlook for
adjusted earnings per share for fiscal year 2024 remains in the
range of $6.30 to $6.80. We are off to a strong start to fiscal
2024 and our underlying assumptions relating to our segments remain
consistent with last quarter. We expect to generate growth in
adjusted EPS as reflected in our guidance range, which at the
midpoint would be a 22% increase as compared to fiscal 2023.”
Keohane continued, “Our outlook for operating cash flow remains
strong, which would allow us to continue investing in strategic
growth projects and to continue to return robust levels of cash to
shareholders through dividends and share repurchases. I am
confident in our strategy and execution capability and anticipate
that our expected performance will place us in or above the
three-year consolidated financial objectives that we outlined at
our December 2021 investor day.”
Earnings Call
The Company will host a conference call with industry analysts
at 8:00 a.m. Eastern time on Tuesday, February 6, 2024. The call
can be accessed through Cabot’s investor relations website at
http://investor.cabot-corp.com
About Cabot Corporation
Cabot Corporation (NYSE: CBT) is a global specialty chemicals
and performance materials company headquartered in Boston,
Massachusetts. The company is a leading provider of reinforcing
carbons, specialty carbons, battery materials, engineered elastomer
composites, inkjet colorants, masterbatches and conductive
compounds, fumed metal oxides and aerogel. For more information on
Cabot, please visit the company’s website at cabotcorp.com. The
Company regularly posts important information on its website and
encourages investors and potential investors to consult the Cabot
website regularly.
Forward-Looking Statements – This earnings release
contains forward-looking statements. All statements that address
expectations or projections about the future, including with
respect to our expectations for our performance in fiscal year
2024, including our expectations for adjusted earnings per share,
the factors that we expect will impact our results of operations,
our expectations for operating cash flow and our uses of such cash,
our expected performance against the financial performance
objectives we outlined at our Investor Day in December 2021, and
our expected operating tax rate for fiscal 2024, and the segment
impact expected with price increases, are forward-looking
statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties, potentially
inaccurate assumptions, and other factors, some of which are beyond
our control and difficult to predict. If known or unknown risks
materialize, or should underlying assumptions prove inaccurate, our
actual results could differ materially from past results and from
those expressed or implied by forward-looking statements. Important
factors that could cause our results to differ materially from
those expressed or implied in the forward-looking statements
include, but are not limited to, industry capacity utilization and
competition from other specialty chemical companies; safety, health
and environmental requirements and related constraints imposed on
our business; regulatory and financial risks related to climate
change developments; volatility in the price and availability of
energy and raw materials, including with respect to the Russian
invasion of Ukraine, and the U.S.-China trade relationship; a
significant adverse change in a customer relationship or the
failure of a customer to perform its obligations under agreements
with us; failure to achieve growth expectations from new products,
applications and technology developments; failure to realize
benefits from acquisitions, alliances, or joint ventures or achieve
our portfolio management objectives; unanticipated delays in, or
increased cost of site development projects; negative or uncertain
worldwide or regional economic conditions and market opportunities,
including from trade relations, global health matters or
geo-political conflicts; litigation or legal proceedings; interest
rates, tax rates, currency exchange controls and fluctuations in
foreign currency rates such as the recent currency movements in
Argentina; and the accuracy of the assumptions we used in
establishing reserves for our share of liability for respirator
claims. These factors are discussed more fully in the reports we
file with the Securities and Exchange Commission (“SEC”),
particularly under the heading “Risk Factors” in our annual report
on Form 10-K for our fiscal year ended September 30, 2023, which
are filed with the SEC at www.sec.gov. We assume no obligation to
provide revisions to any forward-looking statements should
circumstances change, except as otherwise required by securities
and other applicable laws.
Use of Non-GAAP Financial Measures
To supplement Cabot’s consolidated financial statements
presented on a generally accepted accounting principle (“GAAP”)
basis, the preceding discussion of our results and the accompanying
financial tables report Adjusted EPS, Total Segment EBIT, Total
Segment EBITDA, Adjusted EBITDA, our operating tax rate, Free Cash
Flow and Discretionary Free Cash Flow, all of which are non-GAAP
financial measures. These non-GAAP financial measures are not
computed in accordance with, or as an alternative to, GAAP, and the
definitions of these measures may not be comparable to those used
by other companies. Reconciliations of Adjusted EPS to net income
(loss) per share attributable to Cabot Corporation, the most
directly comparable GAAP financial measure, Total Segment EBIT,
Total Segment EBITDA, and Adjusted EBITDA to Income (loss) from
operations before income taxes and equity in earnings of affiliated
companies, the most directly comparable GAAP financial measure of
each such non-GAAP measure, operating tax rate to effective tax
rate, the most directly comparable GAAP financial measure and Free
Cash Flow and Discretionary Free Cash Flow to Cash flow provided by
(used in) operating activities, the most directly comparable GAAP
financial measure, are provided in the tables titled “Cabot
Corporation Certain Items and Reconciliation of Adjusted EPS and
Operating Tax Rate” and “Cabot Corporation Reconciliation of
Non-GAAP Financial Measures.”
Management believes these non-GAAP measures provide investors
with greater transparency to the information used by Cabot
management in its financial and operational decision-making, allow
investors to see Cabot’s results through the eyes of management,
and better enable Cabot’s investors to understand Cabot’s operating
performance and financial condition.
Adjusted EPS. In calculating Adjusted EPS, we exclude
from our net income (loss) attributable to Cabot Corporation items
of expense and income that management does not consider
representative of the Company’s business operations. Accordingly,
reporting earnings on an adjusted basis supplements the GAAP
measure of performance and provides additional information related
to the underlying performance of the business. For example, certain
of the items we exclude are items that we are required by GAAP to
recognize in one period that relate to activities extending over
several periods or relate to single events that management
considers to be unusual and infrequent, although not necessarily
non-recurring. We refer to these items as “certain items.”
Management believes excluding these items facilitates operating
performance comparisons from period to period by eliminating
differences caused by the existence and timing of certain expense
and income items that would not otherwise be apparent on a GAAP
basis and evaluates the Company’s operating performance without the
impact of these costs or benefits. Management also uses Adjusted
EPS as a key measure in evaluating management performance for
incentive compensation purposes.
The items of income and expense that we exclude from our
calculations of Adjusted EPS but that are included in our GAAP net
income (loss) per share, as applicable in a particular reporting
period, include, but are not limited to, the following:
- Asset impairment charges, which primarily include charges
associated with an impairment of goodwill, other long-lived assets
or assets held for sale.
- Charges related to the divestiture of our Purification
Solutions business, which include accelerated costs associated with
the change in control and employee incentive compensation.
- Benefit from the settlement of a royalty arrangement entered
into in connection with the divestiture of our former Specialty
Fluids business.
- Legal and environmental reserves and matters, which consist of
costs or benefits for matters typically related to former
businesses or that are otherwise incurred outside of the ordinary
course of business.
- Global restructuring activities, which include costs or
benefits associated with cost reduction initiatives or plant
closures and are primarily related to (i) employee termination
costs, (ii) asset impairment charges associated with restructuring
actions, (iii) costs to close facilities, including environmental
costs and contract termination penalties, and (iv) gains realized
on the sale of land or equipment associated with restructured
plants or locations.
- Acquisition and integration-related charges, which include
transaction costs, redundant costs incurred during the period of
integration, and costs associated with transitioning certain
management and business processes to Cabot’s processes.
- Gains (losses) on sale of a business.
- Employee benefit plan settlements, which consist of either
charges or benefits associated with the termination of a pension
plan or the transfer of a pension plan to a multi-employer
plan.
- Gain associated with the bargain purchase of a business.
- Gain on the sale of land.
- Argentina controlled currency devaluation loss related to the
foreign exchange loss from government-controlled currency
devaluation on our net monetary assets denominated the Argentina
peso.
Cabot does not provide an expected GAAP EPS range or
reconciliation of the Adjusted EPS range with an expected GAAP EPS
range because, without unreasonable effort, we are unable to
predict with reasonable certainty the matters we would allocate to
“certain items,” including unusual gains and losses, costs
associated with future restructurings, acquisition-related expenses
and litigation outcomes. These items are uncertain, depend on
various factors, and could have a material impact on GAAP EPS in
future periods.
Total Segment EBIT. Total segment EBIT reflects the sum
of EBIT from our two reportable segments. In calculating Total
segment EBIT we exclude from our Income (loss) from operations
before income taxes and equity in earnings of affiliated companies,
certain items and items that, because they are not controlled by
the business segments and primarily benefit corporate objectives,
are not allocated to our business segments, such as interest
expense and other corporate costs, which include unallocated
corporate overhead expenses such as certain corporate salaries and
headquarter expenses, plus costs related to corporate projects and
initiatives.
Total Segment EBITDA. Total Segment EBITDA is equal to
Total Segment EBIT (as defined above), but further adjusted for
depreciation and amortization.
Adjusted EBITDA. Adjusted EBITDA reflects Total Segment
EBITDA and is further adjusted for unallocated corporate costs,
which include unallocated corporate overhead expenses such as
certain corporate salaries and headquarter expenses, plus costs
related to corporate projects and initiatives.
Free Cash Flow. To calculate “Free Cash Flow” we deduct
Additions to property, plant and equipment from cash flow provided
by (used in) operating activities.
Discretionary Free Cash Flow. To calculate “Discretionary
Free Cash Flow” we deduct sustaining and compliance capital
expenditures and changes in Net Working Capital from cash flow
provided by (used in) operating activities.
Operating Tax Rate. Our “operating tax rate” is
calculated based upon management's forecast of the annual operating
tax rate for the fiscal year applied to adjusted pre-tax earnings.
The operating tax rate excludes income tax (expense) benefit on
certain items, discrete tax items and, on a quarterly basis the
timing of losses in certain jurisdictions. The income tax (expense)
benefit on certain items is determined using the applicable rates
in the taxing jurisdictions in which the certain items occurred and
includes both current and deferred income tax (expense) benefit
based on the nature of the certain items. Discrete tax items
include, but are not limited to, changes in valuation allowance,
uncertain tax positions, and other tax items, such as the tax
impact of legislative changes and tax accruals on historic earnings
due to changes in indefinite reinvestment assertions. Management
believes that this non-GAAP financial measure is useful
supplemental information because it helps our investors compare our
tax rate year to year on a consistent basis and to understand what
our tax rate on current operations would be without the impact of
these items.
Cabot does not provide a forward-looking reconciliation of the
operating tax rate range with an effective tax rate range because,
without unreasonable effort, we are unable to predict with
reasonable certainty the matters we would allocate to “certain
items,” including unusual gains and losses, costs associated with
future restructurings, acquisition-related expenses and litigation
outcomes. These items are uncertain, depend on various factors, and
could have a material impact on the effective tax rate in future
periods.
Explanation of Terms Used
Product Mix. The term “product mix” refers to the mix of
types and grade of products sold or the mix of geographic regions
where products are sold, and the positive or negative impact this
has on the revenue or profitability of the business or segment.
Net Working Capital. The term “net working capital”
includes accounts receivable, inventory and accounts payable and
accrued expenses.
CABOT CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS Periods ended December 31 Three Months
Dollars in millions, except per share amounts (unaudited)
2023
2022
Net sales and other operating revenues
$
958
$
965
Cost of sales
740
784
Gross profit
218
181
Selling and administrative expenses
67
60
Research and technical expenses
15
13
Loss on sale of business
—
3
Income (loss) from operations
136
105
Other income (expense) Interest and dividend income
9
6
Interest expense
(22
)
(22
)
Other income (expense)
(29
)
(5
)
Total other income (expense)
(42
)
(21
)
Income (loss) from operations before income taxes and equity
in earnings of affiliated companies
94
84
(Provision) benefit for income taxes
(34
)
(20
)
Equity in earnings of affiliated companies, net of tax
1
2
Net income (loss)
61
66
Net income (loss) attributable to noncontrolling interests, net of
tax
11
12
Net income (loss) attributable to Cabot Corporation
$
50
$
54
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
0.88
$
0.93
Diluted weighted average common shares outstanding
55.8
56.7
CABOT CORPORATION SUMMARY RESULTS BY SEGMENT
Periods ended December 31 Three Months Dollars in millions,
except per share amounts (unaudited)
2023
2022
Sales Reinforcement Materials
$
641
$
643
Performance Chemicals
285
286
Segment sales
926
929
Unallocated and other (A)
32
36
Net sales and other operating revenues
$
958
$
965
Segment Earnings Before Interest and Taxes (B)
Reinforcement Materials
$
129
$
94
Performance Chemicals
34
29
Total Segment Earnings Before Interest and Taxes
163
123
Unallocated and Other Interest expense
(22
)
(22
)
Certain items (C)
(42
)
(4
)
Unallocated corporate costs
(17
)
(15
)
General unallocated income (expense) (D)
13
4
Less: Equity in earnings of affiliated companies, net of tax
1
2
Income (loss) from operations before income taxes and equity
in earnings of affiliated companies
94
84
(Provision) benefit for income taxes (including tax certain items)
(34
)
(20
)
Equity in earnings of affiliated companies, net of tax
1
2
Net income (loss)
61
66
Net income (loss) attributable to noncontrolling interests, net of
tax
11
12
Net income (loss) attributable to Cabot Corporation
$
50
$
54
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
0.88
$
0.93
Adjusted earnings (loss) per share (E)
$
1.56
$
0.98
Diluted weighted average common shares outstanding
55.8
56.7
(A) Unallocated and other reflects external shipping and handling
fees, royalties, the impact of unearned revenue, discounting
charges for certain Notes receivable, and other by-product revenue.
(B) Segment EBIT is a measure used by Cabot's Chief
Operating Decision-Maker to measure consolidated operating results,
assess segment performance and allocate resources. Segment EBIT
includes Equity in earnings of affiliated companies, net of tax,
royalties, Net income attributable to noncontrolling interests, net
of tax, and discounting charges for certain Notes receivable.
(C) Details of Certain items are presented in the
Certain Items and Reconciliation of Adjusted EPS and Operating Tax
Rate table. (D) General unallocated income (expense)
consists of gains (losses) arising from foreign currency
transactions, net of other foreign currency risk management
activities, Interest and dividend income, the profit or loss
related to the corporate adjustment for unearned revenue and
unrealized holding gains (losses) for investments. This does not
include items of income or expense from the items that are
separately treated as Certain items. (E)
Adjusted EPS is a non-GAAP measure, and a reconciliation of
Adjusted EPS to GAAP EPS is presented in the Certain Items and
Reconciliation of Adjusted EPS and Operating Tax Rate table.
CABOT CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION December 31, September 30,
Dollars in millions (unaudited)
2023
2023
Current assets: Cash and cash equivalents
$
244
$
238
Accounts and notes receivable, net of reserve for doubtful accounts
of $3 and $2
726
695
Inventories: Raw materials
154
148
Finished goods
398
374
Other
65
63
Total inventories
617
585
Prepaid expenses and other current assets
105
108
Total current assets
1,692
1,626
Property, plant and equipment
3,936
3,827
Accumulated Depreciation
(2,492
)
(2,415
)
Net property, plant and equipment
1,444
1,412
Goodwill
138
134
Equity affiliates
21
20
Intangible assets, net
61
60
Deferred income taxes
166
180
Other assets
173
172
Total assets
$
3,695
$
3,604
CABOT CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION December 31, September 30,
Dollars in millions, except share and per share amounts (unaudited)
2023
2023
Current liabilities: Short-term borrowings
$
206
$
174
Accounts payable and accrued liabilities
585
600
Income taxes payable
31
40
Current portion of long-term debt
8
8
Total current liabilities
830
822
Long-term debt
1,098
1,094
Deferred income taxes
51
50
Other liabilities
241
231
Stockholders' equity: Preferred stock: Authorized: 2,000,000
shares of $1 par value Issued and Outstanding: None and none
—
—
Common stock: Authorized: 200,000,000 shares of $1 par value
Issued: 55,560,648 and 55,379,636 share Outstanding: 55,424,816 and
55,243,804 shares
55
55
Less cost of 135,832 and 135,832 shares of common treasury stock
(3
)
(3
)
Additional paid-in capital
—
—
Retained earnings
1,582
1,574
Accumulated other comprehensive income (loss)
(305
)
(362
)
Total Cabot Corporation stockholders' equity
1,329
1,264
Noncontrolling interests
146
143
Total stockholders' equity
1,475
1,407
Total liabilities and stockholders' equity
$
3,695
$
3,604
CABOT CORPORATION QUARTERLY RESULTS BY SEGMENT
Fiscal 2023 Fiscal 2024 Dollars in millions,
except per share amounts (unaudited) Dec. Q Mar. Q June Q Sept. Q
FY Dec. Q Mar. Q June Q Sept. Q
FY
Sales Reinforcement Materials
$
643
$
672
$
624
$
624
$
2,563
$
641
$
―
$
―
$
―
$
641
Performance Chemicals
286
326
307
306
$
1,225
285
—
—
—
285
Segment sales
929
998
931
930
3,788
926
—
—
—
926
Unallocated and other (A)
36
35
37
35
143
32
—
—
—
32
Net sales and other operating revenues
$
965
$
1,033
$
968
$
965
$
3,931
$
958
$
―
$
―
$
―
$
958
Segment Earnings Before Interest and Taxes (B)
Reinforcement Materials
$
94
$
122
$
132
$
134
$
482
$
129
$
―
$
―
$
―
$
129
Performance Chemicals
29
28
32
36
125
34
—
—
—
34
Total Segment Earnings Before Interest and Taxes
123
150
164
170
607
163
—
—
—
163
Unallocated and Other Interest expense
(22
)
(23
)
(24
)
(21
)
(90
)
(22
)
—
—
—
(22
)
Certain items (C)
(4
)
(2
)
(1
)
(22
)
(29
)
(42
)
—
—
—
(42
)
Unallocated corporate costs
(15
)
(16
)
(11
)
(12
)
(54
)
(17
)
—
—
—
(17
)
General unallocated income (expense) (D)
4
2
3
13
22
13
—
—
—
13
Less: Equity in earnings of affiliated companies, net of tax
2
1
1
1
5
1
—
—
—
1
Income (loss) from operations before income taxes and equity in
earnings of affiliated companies
84
110
130
127
451
94
—
—
—
94
(Provision) benefit for income taxes (including tax certain items)
(20
)
(29
)
(41
)
118
28
(34
)
—
—
—
(34
)
Equity in earnings of affiliated companies, net of tax
2
1
1
1
5
1
—
—
—
1
Net income (loss)
66
82
90
246
484
61
—
—
—
61
Net income (loss) attributable to noncontrolling interests, net of
tax
12
7
8
12
39
11
—
—
—
11
Net income (loss) attributable to Cabot Corporation
$
54
$
75
$
82
$
234
$
445
$
50
$
―
$
―
$
―
$
50
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
$
0.88
$
—
$
—
$
—
$
0.88
Adjusted earnings (loss) per share (E)
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
$
1.56
$
—
$
—
$
—
$
1.56
Diluted weighted average common shares outstanding
56.7
56.8
56.5
56.1
56.5
55.8
—
—
—
55.8
(A) Unallocated and other reflects external shipping and handling
fees, royalties, the impact of unearned revenue, discounting
charges for certain Notes receivable, and other by-product revenue.
(B) Segment EBIT is a measure used by Cabot's Chief
Operating Decision-Maker to measure consolidated operating results,
assess segment performance and allocate resources. Segment EBIT
includes Equity in earnings of affiliated companies, net of tax,
royalties, Net income attributable to noncontrolling interests, net
of tax, and discounting charges for certain Notes receivable.
(C) Details of certain items are presented in the Certain
Items and Reconciliation of Adjusted EPS and Operating Tax Rate
table. (D) General unallocated income (expense) consists of gains
(losses) arising from foreign currency transactions, net of other
foreign currency risk management activities, Interest and dividend
income, the profit or loss related to the corporate adjustment for
unearned revenue and unrealized holding gains (losses) for
investments. This does not include items of income or expense from
the items that are separately treated as Certain items. (E)
Adjusted EPS is a non-GAAP measure, and a reconciliation of
Adjusted EPS to GAAP EPS is presented in the Certain Items and
Reconciliation of Adjusted EPS and Operating Tax Rate table.
CABOT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS Periods ended December 31 Three Months
Dollars in millions (unaudited)
2023
2022
Cash Flows from Operating Activities: Net income
(loss)
$
61
$
66
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization
41
35
Other non-cash charges (gains), net
49
2
Cash dividends received from
equity affiliates
1
2
Changes in assets and liabilities: Changes in certain working
capital items (A)
(46
)
(34
)
Changes in other assets and liabilities, net
(1
)
(19
)
Cash provided by (used in) operating activities
105
52
Cash Flows from Investing Activities: Additions to
property, plant and equipment
(54
)
(35
)
Proceeds from sale of business
—
6
Other investing activities, net
—
12
Cash provided by (used in) investing activities
(54
)
(17
)
Cash Flows from Financing Activities: Change in debt,
net
31
(43
)
Cash dividends paid to common stockholders
(22
)
(21
)
Other financing activities, net
(38
)
(28
)
Cash provided by (used in) financing activities
(29
)
(92
)
Effect of exchange rates on cash
(16
)
41
Increase (decrease) in cash and cash equivalents.
6
(16
)
Cash and cash equivalents at beginning of period
238
206
Cash and cash equivalents at end of period
$
244
$
190
(A) Includes Accounts and notes receivable, Inventories, and
Accounts payable and accrued liabilities.
CABOT
CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND
OPERATING TAX RATE TABLE 1: DETAIL OF CERTAIN
ITEMS Periods ended December 31 Three Months Dollars in
millions, except per share amounts (unaudited)
2023
2022
Certain items before and after income
taxes Argentina controlled currency devaluation loss
$
(33
)
$
―
Global restructuring activities
(9
)
—
Gain on sale of land
—
1
Loss on sale of business
—
(3
)
Legal and environmental matters and reserves
—
(1
)
Acquisition and integration-related charges
—
(1
)
Total certain items, pre-tax
(42
)
(4
)
Non-GAAP tax adjustments(A)
4
1
Total certain items after tax
$
(38
)
$
(3
)
Total certain items after tax per share impact
$
(0.68
)
$
(0.05
)
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE
ITEM Periods ended December 31 Three Months Dollars in
millions, Pre-Tax (unaudited)
2023
2022
Statement of Operations Line Item
(B) Cost of sales
$
(9
)
$
(2
)
Selling and administrative expenses
—
1
Other income (expense)
(33
)
—
Loss on sale of business
—
(3
)
Total certain items
$
(42
)
$
(4
)
TABLE 3: RECONCILIATION OF EFFECTIVE TAX RATE TO
OPERATING TAX RATE Three months ended December 31
2023
2022
Dollars in millions (unaudited) (Provision) / Benefit for Income
Taxes Rate (Provision) / Benefit for Income Taxes Rate
Effective Tax Rate
$
(34
)
36
%
$
(20
)
24
%
Less: Non-GAAP tax adjustments(A)
4
1
Operating tax rate (C) (D)
$
(38
)
28
%
$
(21
)
25
%
TABLE 4: RECONCILIATION OF ADJUSTED EPS BY QUARTER FOR
FISCAL 2024 and FISCAL 2023 Fiscal 2024 (E) Periods
ended (unaudited) Dec. Q Mar. Q June Q Sept. Q FY 2024
Reconciliation of Adjusted EPS to GAAP EPS Net
income (loss) per share attributable to Cabot Corporation
$
0.88
$
—
$
—
$
—
$
0.88
Less: Certain items after tax per share
(0.68
)
—
—
—
$
(0.68
)
Adjusted earnings (loss) per share
$
1.56
$
—
$
—
$
—
$
1.56
Fiscal 2023 (E) Periods ended (unaudited) Dec. Q Mar.
Q June Q Sept. Q FY 2023
Reconciliation of
Adjusted EPS to GAAP EPS Net income (loss) per share
attributable to Cabot Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
Less: Certain items after tax per share
(0.05
)
(0.04
)
0.01
2.45
2.35
Adjusted earnings (loss) per share
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
(A) Non-GAAP tax adjustments are made to arrive at the operating
tax provision. It includes the income tax (expense) benefit on
certain items, discrete tax items, and, on a quarterly basis the
timing of losses in certain jurisdictions. The income tax (expense)
benefit on certain items is determined using the applicable rates
in the taxing jurisdictions in which the certain items occurred and
includes both current and deferred income tax (expense) benefit
based on the nature of the certain items. Discrete tax items
include, but are not limited to, changes in valuation allowance,
uncertain tax positions, and other tax items, such as the tax
impact of legislative changes and tax accruals on historic earnings
due to changes in indefinite reinvestment assertions. (B)
This table indicates the line items where certain items are
recorded in the Consolidated Statements of Operations. (C) The
operating tax rate is calculated based upon management's forecast
of the annual operating tax rate for the fiscal year applied to
adjusted pre-tax earnings. The operating tax rate excludes income
tax (expense) benefit on certain items, discrete tax items and, on
a quarterly basis the timing of losses in certain jurisdictions.
(D) Our operating tax rate for fiscal 2024 is expected to be in the
range of 28% to 30% (E) Per share amounts are calculated after tax.
CABOT CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES Fiscal 2024 (A) Dec. Q Mar. Q
June Q Sept. Q FY 2024
Reconciliation of
Adjusted EPS to GAAP EPS Net income (loss) per share
attributable to Cabot Corporation
$
0.88
$
—
$
—
$
—
$
0.88
Less: Certain items after tax per share
(0.68
)
—
—
—
(0.68
)
Adjusted earnings (loss) per share
$
1.56
$
—
$
—
$
—
$
1.56
Fiscal 2023 (A) Dec. Q Mar. Q June Q Sept. Q FY 2023
Reconciliation of Adjusted EPS to GAAP
EPS Net income (loss) per share attributable to Cabot
Corporation
$
0.93
$
1.29
$
1.43
$
4.10
$
7.73
Less: Certain items after tax per share
(0.05
)
(0.04
)
0.01
2.45
2.35
Adjusted earnings (loss) per share
$
0.98
$
1.33
$
1.42
$
1.65
$
5.38
(A) Per share amounts are calculated after tax.
Dollars in millions
Fiscal 2024 Dec. Q Mar. Q June Q Sept. Q
FY 2024
Reconciliation of Total Segment
EBIT, Total Segment EBITDA and Adjusted EBITDA to Net Income and
Segment EBITDA Margin Net income (loss) attributable
to Cabot Corporation
$
50
$
―
$
―
$
―
$
50
Net income (loss) attributable to noncontrolling interests
11
—
—
—
11
Equity in earnings of affiliated companies, net of tax
(1
)
—
—
—
(1
)
Provision (benefit) for income taxes
34
—
—
—
34
Income (loss) from operations before income taxes and equity in
earnings of affiliated companies
$
94
$
―
$
―
$
―
$
94
Interest expense
22
—
—
—
22
Certain items
42
—
—
—
42
Unallocated corporate costs
17
—
—
—
17
General unallocated (income) expense
(13
)
—
—
—
(13
)
Less: Equity in earnings of affiliated companies
(1
)
—
—
—
(1
)
Total Segment EBIT
$
163
$
―
$
―
$
―
$
163
Depreciation and amortization excluding corporate depreciation
35
—
—
—
35
Total Segment EBITDA
$
198
$
―
$
―
$
―
$
198
Less: Unallocated corporate costs before corporate depreciation
17
—
—
—
17
Adjusted EBITDA
$
181
$
―
$
―
$
―
$
181
Dollars in millions Dec. Q Mar. Q June Q Sept. Q FY 2024
Reinforcement Materials EBIT
$
129
$
―
$
―
$
―
$
129
Reinforcement Materials Depreciation and amortization
17
—
—
—
17
Reinforcement Materials EBITDA
$
146
$
―
$
―
$
―
$
146
Reinforcement Materials Sales
$
641
$
―
$
―
$
―
$
641
Reinforcement Materials EBITDA Margin
23
%
—
%
—
%
—
%
23
%
Dollars in millions Dec. Q Mar. Q June Q Sept. Q FY 2024
Performance Chemicals EBIT
$
34
$
―
$
―
$
―
$
34
Performance Chemicals Depreciation and amortization
18
—
—
—
18
Performance Chemicals EBITDA
$
52
$
―
$
―
$
―
$
52
Performance Chemicals Sales
$
285
$
―
$
―
$
―
$
285
Performance Chemicals EBITDA Margin
18
%
—
%
—
%
—
%
18
%
Dollars in millions
Fiscal 2024 Reconciliation of Free Cash Flow and Discretionary Free
Cash Flow to Cash provided by (used in) operating
activities Dec. Q Mar. Q June Q Sept. Q FY 2024
Cash
provided by (used in) operating activities (B)
$
105
$
―
$
―
$
―
$
105
Less: Additions to property, plant and equipment
54
—
—
—
54
Free cash flow
$
51
$
―
$
―
$
―
$
51
Plus: Additions to property, plant and equipment
54
—
—
—
54
Less: Changes in net working capital (C)
(46
)
—
—
—
(46
)
Less: Sustaining and compliance capital expenditures
33
—
—
—
33
Discretionary free cash flow
$
118
$
―
$
―
$
―
$
118
(B) As provided in the Condensed Consolidated Statements of Cash
Flows. (C) 'Defined as changes in accounts receivable, inventory
and accounts payable and accrued liabilities as presented on the
Condensed Consolidated Statements of Cash Flows.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240202410636/en/
Investor Contact: Steve Delahunt (617) 342-6255
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