Core Viewpoint - Cabot Corporation has appointed William Masterson as the new senior vice president and president of the Reinforcement Materials segment, effective November 21, 2025, succeeding Matthew Wood who has left the company immediately [1][2]. Group 1: Leadership Transition - William Masterson has been with Cabot since 2011 and has held various leadership roles, most recently as vice president of Global Business Operations for Carbon and Silica Technologies, overseeing multiple manufacturing facilities globally [3]. - Masterson's previous roles included vice president and regional business director for the Americas in specialty carbons and fumed metal oxides, where he was responsible for sales, marketing, and technical service activities [3]. - The departure of Matthew Wood was not due to any disagreements regarding the company's business performance or operations [2]. Group 2: Masterson's Qualifications - Masterson brings a strong background in global business operations and commercial strategy, with a proven track record in leading complex organizations [4]. - He is recognized for his collaborative leadership style and ability to develop talent within the company, which is expected to support the Reinforcement Materials business [4]. - The existing team in the Reinforcement Materials segment is described as long-tenured and highly experienced, providing a solid foundation for Masterson's leadership [4]. Group 3: Company Overview - Cabot Corporation is a global specialty chemicals and performance materials company headquartered in Boston, Massachusetts, known for its products including reinforcing carbons, specialty carbons, battery materials, and fumed metal oxides [5].

Core Insights - Cabot Corporation's LITX® 95F conductive carbon has been recognized as one of the "Top 10 Exhibits of 2025" at the China International Import Expo (CIIE), highlighting its significance in the energy storage systems (ESS) market [1][2][3] Company Achievements - The recognition of LITX® 95F marks it as the first product from the specialty chemicals and performance materials sector to receive this award, showcasing Cabot's leadership in clean energy technology [2][3] - The award was presented during a global forum that emphasizes sustainable economic development, reinforcing Cabot's commitment to innovation in conductive additives [2][3] Market Impact - The LITX® 95F product is positioned to enhance the reliability and efficiency of energy storage systems, catering to the growing demand for clean energy and the expansion of AI and data centers globally [3] - The 8th CIIE featured over 4,100 exhibiting companies from 155 countries, indicating a robust international presence and competition in the energy storage sector [3] Company Overview - Cabot Corporation is a global leader in specialty chemicals and performance materials, providing a diverse range of products including reinforcing carbons and battery materials [5]

Core Insights - Cabot Corporation (CBT) has established a strong financial foundation while its stock remains undervalued compared to recent highs, presenting a potential investment opportunity [2][3] - The company generates solid cash flow, maintains resilient margins, and offers an attractive valuation, making it appealing for income and value-focused investors [2] Financial Metrics - Cabot's free cash flow yield stands at 10.8%, which is notably high compared to many stocks [8] - The company has experienced a 3-year average revenue growth of -2.5% and maintains an operating margin of 15.0%, indicating sound fundamentals despite revenue challenges [8] - CBT stock is currently trading 47% below its 2-year high and 18% below its 1-month high, with a price-to-sales ratio lower than its 3-year average [8] Market Performance - Historical data shows average forward returns of 10.4% over 6 months and 20.4% over 12 months, with a win rate of approximately 74% for positive returns over a 12-month span [9] - The investment strategy applied to high free cash flow yield stocks has yielded nearly 18% average return over 12 months, even during non-crash periods, with a 70% win rate [10] Risk Considerations - CBT has experienced significant declines in the past, including an 83% drop during the Global Financial Crisis and a 55% drop during the Covid sell-off, highlighting its vulnerability to market volatility [11] - The stock can also decline in strong market conditions due to factors like earnings announcements and business updates, indicating that sound fundamentals are crucial for stability [12]

Core Insights - Cabot Corporation (CBT) reported fourth-quarter fiscal 2025 earnings of 79 cents per share, a significant decline from $2.43 in the same quarter last year [1] - Adjusted earnings were $1.70 per share, down from $1.80 year-over-year, and missed the Zacks Consensus Estimate of $1.72 [1] - Net sales for the quarter were $899 million, falling short of the Zacks Consensus Estimate of $952.6 million, and representing a 10.2% decrease from the prior-year quarter [1] Segment Performance - Sales in the Reinforcement Materials segment decreased by approximately 12.6% year-over-year to $563 million, missing the Zacks Consensus Estimate of $617 million [2] - Earnings before interest and tax (EBIT) in the Reinforcement Materials segment were $119 million, down around 3.3% from the previous year, primarily due to lower volumes in the Asia Pacific and the Americas [2] - The Performance Chemicals division saw a 4.3% decline in sales to $308 million, also missing the Zacks Consensus Estimate of $313 million [3] - EBIT in the Performance Chemicals segment decreased by approximately 4.6% to $42 million, driven by a 5% decrease in volumes, particularly due to reduced demand in Europe [3] Financial Overview - At the end of the fourth quarter, Cabot had a cash balance of $258 million, with cash flows from operating activities amounting to $219 million [4] - Capital expenditures for the quarter totaled $64 million, while $25 million was used for dividends and $39 million for share repurchases [4] Future Outlook - The company does not expect a recovery in the external environment for fiscal 2026, citing ongoing weakness in regional demand for Reinforcement Materials due to high Asian tire imports [5] - Adjusted EPS for fiscal 2026 is projected to be between $6.00 and $7.00, reflecting macroeconomic uncertainty and competitive pressures [5] - Performance Chemicals is expected to show profit growth, supported by strength in Battery Materials and opportunities in infrastructure and alternative energy [5] Stock Performance - Cabot's shares have declined by 47.6% over the past year, compared to a 39.1% decline in the industry [6]

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 record adjusted earnings per share (EPS) 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 1.2 times, with liquidity of $1.5 billion [15][27] Business Line Data and Key Metrics Changes - In the reinforcement materials segment, EBIT decreased by $4 million in Q4 compared to the same period last year, primarily due to a 5% decline in volumes [28] - Performance chemicals segment EBIT decreased by $2 million in Q4, with volumes also down by 5% year over year [30] - For fiscal year 2025, performance chemicals EBIT increased by $30 million compared to the prior year, driven by higher volumes in specific product lines [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 a sequential decrease in EBIT of approximately $15-$20 million in Q1 of fiscal 2026 due to lower volumes and increased competitive intensity [29] 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 [17] - An acquisition of Bridgestone's reinforcing carbon plants in Mexico is expected to close in Q2 of fiscal 2026, which will strengthen the company's portfolio and drive growth [19] - The company is pursuing a bifurcation strategy in China while focusing on building incumbency in Western markets [23] Management's Comments on Operating Environment and Future Outlook - The management noted that fiscal year 2025 was characterized by a turbulent macroeconomic environment, with expectations for light vehicle auto production in North America and Europe to decline for a third consecutive year in 2026 [32][34] - The company anticipates adjusted EPS for fiscal year 2026 to be between $6 and $7, reflecting various scenarios related to volumes and pricing outcomes [34] - Management highlighted ongoing challenges in the automotive and construction sectors but expects growth in battery materials and other targeted applications [37] Other Important Information - The company paid $96 million in dividends in fiscal year 2025, reflecting a 5% increase, and repurchased $168 million of shares [18] - The operating tax rate for fiscal year 2025 was 27%, with expectations for 2026 to be in the range of 27%-29% [27] Q&A Session Summary Question: Are you seeing any volatility in your rubber-black operating rates regionally? - Management indicated that operating rates are largely stable, influenced by elevated tire imports affecting demand [46][47] Question: Are you being impacted at all by Dow's silicone rationalization efforts in Europe? - Management confirmed ongoing discussions with Dow regarding their siloxanes plant closure and its impact on their fume silica plant [48] Question: How much do you expect 2026 tire contract prices to be down? - Management noted that approximately 25% of contracts have been completed, which is behind last year's pace, and emphasized the uncertainty in demand projections for 2026 [51][53] Question: Could you elaborate on the performance chemicals segment's guidance? - Management explained that while certain applications are in a cyclical trough, targeted growth areas like battery materials are expected to drive volume growth [56][57] Question: How did regional utilization rates perform during the quarter? - Management provided a regional breakdown, noting that North America is at 75%-80% utilization, Europe at around 85%, and Asia-Pacific at high utilizations [61][63]

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 - In fiscal year 2025, the company achieved a record adjusted earnings per share of $7.25, representing a 3% increase year over year [12] - Adjusted EBITDA for the year was $800 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 [15] - The net debt to EBITDA ratio was 1.2 times, with liquidity of $1.5 billion [14][15] 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 lower volumes, which were down 5% year over year [27] - Performance Chemicals saw a $30 million increase in EBIT for the fiscal year, driven by higher volumes in specific product lines [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 noted persistent end market weakness in sectors like automotive and construction, but targeted applications in infrastructure and alternative energy showed favorable trends [19][37] Company Strategy and Development Direction - The company is focused on three capital allocation priorities: maintaining asset reliability, pursuing organic and inorganic growth investments, and returning capital to shareholders [15][16] - An acquisition of Bridgestone's reinforcing carbon plant in Mexico was announced, expected to close in the second fiscal quarter and to be accretive in the first year [18] - The company aims to build a leading battery materials business, leveraging organic technology development and strategic M&A [22][24] Management's Comments on Operating Environment and Future Outlook - The management highlighted a turbulent macroeconomic environment in fiscal year 2025, with expectations for continued challenges in 2026 [12][33] - Adjusted earnings per share for fiscal year 2026 are expected to be between $6 and $7, reflecting uncertainty in demand and pricing pressures [34] - The management emphasized the importance of operational excellence and cost optimization in navigating the current market dynamics [44][45] Other Important Information - The company maintained a continuous and growing dividend since 1968, with $96 million paid in dividends in fiscal year 2025 [16] - The operating tax rate for fiscal year 2025 was 27%, up from 26% in the previous year, influenced by geographic earnings mix and new global tax regulations [27] 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, though influenced by elevated tire imports affecting demand [48] Question: How much do you expect 2026 tire contract prices to be down? - Approximately 25% of contracts have been completed, which is behind last year's pace, with ongoing negotiations impacted by demand uncertainty [51][52] Question: Can you elaborate on the underlying assumptions for Performance Chemicals guidance? - The company expects overall volume growth in 2026, driven by targeted applications in battery materials and infrastructure, despite headwinds in automotive and construction [53][55] Question: How did regional utilization rates shake out during the quarter? - Utilization rates in North America are between 75-80%, higher in Europe at around 85%, while South America remains lower due to tire imports [61]

Financial Performance - Fiscal Year 2025 - Diluted EPS was $6.02, while Adjusted EPS was $7.25, representing a 3% year-over-year increase[5] - Adjusted EBITDA increased to $804 million, with an Adjusted EBITDA Margin of 22%[12] - Operating Cash Flow was $665 million, supporting $96 million in dividends and $168 million in share repurchases[9] - Capital Expenditures totaled $274 million[16] - Free Cash Flow reached $391 million[16] Segment Performance - Fiscal Year 2025 - Reinforcement Materials segment EBIT decreased by 5%[7, 36] - Performance Chemicals segment EBIT increased by 18%[7, 42] Strategic Outlook - Fiscal Year 2026 - Adjusted EPS is expected to be in the range of $6.00 to $7.00[50, 65] - Capital Expenditures are projected to be between $200 million and $250 million[65] - Share repurchases are estimated to be between $100 million and $200 million[65] - The operating tax rate is forecasted to be in the range of 27% to 29%[34, 65]

Earnings Performance - Fourth Quarter 2025 diluted EPS was $0.79, and adjusted EPS was $1.70, representing a 6% decrease year-over-year [5]. - Fiscal Year 2025 diluted EPS was $6.02, and adjusted EPS was $7.25, reflecting a 3% increase year-over-year [5]. - Diluted earnings per share for Q4 2025 were $0.79, a significant drop from $2.43 in Q4 2024 [32]. - Diluted earnings per share attributable to Cabot Corporation for the fiscal year 2025 was $6.02, down from $6.72 in fiscal year 2024, reflecting a decrease of 10.4% [37]. - Adjusted earnings per share for fiscal year 2025 was $7.25, compared to $7.06 in fiscal year 2024, showing an increase of 2.7% [37]. - Net income for the fiscal year 2025 was $376 million, down from $424 million in fiscal year 2024, a decline of 11.3% [36]. - Net income attributable to Cabot Corporation for the twelve months ended September 30, 2025, was $331 million, compared to $380 million for the same period in 2024, reflecting a decrease of 12.9% [32]. - Net income for the three months ended September 30, 2025, was $54 million, a decrease of 63% compared to $146 million in the same period of 2024 [39]. Sales and Revenue - Fourth Quarter 2025 net sales were $899 million, down from $1,001 million in the same quarter of the previous year [7]. - Net sales for Q4 2025 were $899 million, a decrease of 10.2% from $1,001 million in Q4 2024 [31]. - Net sales for the fiscal year 2025 were $3,591 million, a decrease of 6.9% compared to $3,860 million in fiscal year 2024 [36]. - The company reported a decrease in net sales for the Reinforcement Materials segment to $2,340 million in fiscal year 2025 from $2,610 million in fiscal year 2024, a drop of 10.4% [36]. - The Performance Chemicals segment reported sales of $1,250 million for fiscal year 2025, consistent with the previous fiscal year [36]. - Segment sales for Reinforcement Materials in Q4 2025 were $563 million, a decrease of 12.6% from $644 million in Q4 2024 [32]. Cash Flow and Investments - Cash flows from operations for Fiscal Year 2025 totaled $665 million, supporting $274 million in capital investments, $96 million in dividends, and $168 million in share repurchases [5]. - The company ended the fourth quarter with a cash balance of $258 million and generated $219 million in cash flows from operating activities [11]. - Cash provided by operating activities for the twelve months ended September 30, 2025, was $665 million, down from $692 million in 2024, reflecting a decrease of approximately 4% [39]. - Cash dividends paid to common stockholders for the twelve months ended September 30, 2025, totaled $96 million, slightly up from $93 million in 2024 [39]. - Free cash flow for FY 2025 was $391 million, with quarterly free cash flow of $47 million in December, $1 million in March, $188 million in June, and $155 million in September [45]. - Discretionary free cash flow for FY 2025 was $447 million, with quarterly figures of $114 million in December, $110 million in March, $114 million in June, and $109 million in September [45]. Assets and Liabilities - Total assets as of September 30, 2025, were $3,815 million, compared to $3,736 million as of September 30, 2024 [34]. - Total current liabilities increased to $957 million in September 2025 from $772 million in September 2024, representing a 24% increase [35]. - Long-term debt decreased to $856 million in September 2025 from $1,087 million in September 2024, a reduction of 21% [35]. - Total stockholders' equity rose to $1,705 million in September 2025, up from $1,590 million in September 2024, indicating a growth of 7.2% [35]. - Total inventories as of September 30, 2025, were $504 million, down from $552 million as of September 30, 2024 [34]. Taxation - The effective tax rate for the fourth quarter was 55%, with an operating tax rate for Fiscal Year 2025 at 27% [12]. - The effective tax rate for the twelve months ended September 30, 2025, was 35%, compared to 21% in 2024, reflecting a notable increase in the tax burden [41]. - The company expects its operating tax rate for fiscal 2026 to be in the range of 27% to 29% [43]. Sustainability and Future Outlook - The company achieved 11 out of 15 of its 2025 Sustainability Goals ahead of schedule and established new goals for 2030 [5]. - For Fiscal Year 2026, the company expects adjusted EPS to be in the range of $6.00 to $7.00, reflecting uncertain macroeconomic conditions [13]. Segment Performance - EBIT in Reinforcement Materials decreased by 5% year-over-year, while EBIT in Performance Chemicals increased by 18% [5]. - Segment earnings before interest and taxes for Performance Chemicals in Q4 2025 were $42 million, down from $44 million in Q4 2024 [32]. - Total Segment EBIT for fiscal 2025 was $702 million, compared to $665 million in fiscal 2024, showing an increase of approximately 5.6% [44]. - Total Segment EBITDA for FY 2025 was $856 million, with a quarterly breakdown of $212 million in December, $219 million in March, $224 million in June, and $201 million in September [45]. - Adjusted EBITDA for FY 2025 reached $804 million, with quarterly figures of $199 million in December, $206 million in March, $211 million in June, and $188 million in September [45]. - Reinforcement Materials Sales totaled $2,341 million for FY 2025, with quarterly sales of $611 million in December, $594 million in March, $573 million in June, and $563 million in September [45]. - Performance Chemicals Sales amounted to $1,250 million for FY 2025, with consistent quarterly sales of $311 million in December and March, $320 million in June, and $308 million in September [45]. - Reinforcement Materials EBITDA Margin averaged 25% for FY 2025, with quarterly margins of 24% in December, 25% in March, 25% in June, and 24% in September [45]. - Performance Chemicals EBITDA Margin averaged 22% for FY 2025, with quarterly margins of 21% in December, 23% in March, 24% in June, and 21% in September [45].