Cabot Corporation · NYSE:CBT
Cabot — Q4 2023 Earnings Presentation
24 slides from Cabot's earnings presentation, Nov 7, 2023
Slide 1: Cabot Earnings Teleconference Fourth Quarter Fiscal 2023
CABOT EARNINGS TELECONFERENCE FOURTH QUARTER – FISCAL 2023
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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 2024, including for adjusted EPS, with respect to anticipated growth in
Slide 3: Fiscal 2023 Summary
Fiscal 2023 Summary 1 FY23 GAAP EPS of $7.73; Adjusted EPS1 of $5.38 2 Record Reinforcement Materials EBIT of $482 million Operating cash flow of $595 million; Free cash flow 3 of $351 million Returned $186 million to shareholders in the form of 4 dividends and share repurchases 5 Continued leadersh
Slide 4: Creating for Tomorrow | Fiscal Year 2023
Creating for Tomorrow| Fiscal Year 2023 Total Segment EBIT1($ in million) -5% Volumes decreased across both Reinforcement Materials and Performance Chemicals segments Improved price/mix, net of costs, in Reinforcement Materials segment Negative foreign currency impact from Adjusted EPS1 strengthenin
Slide 5: Reinforcement Materials Update
Reinforcement Materials Update Structurally different business with growing and resilient results FY EBIT1 Progression ($M) Current Industry and Business Dynamics $482 $408 ◆ Cabot is a global leader in reinforcing carbons $329 $279 $266 $193 ◆ Resilient replacement tire market $137 $162 ◆ Limited s
Slide 6: Capital Allocation Framework
Capital Allocation Framework Fiscal 2023 Results $595 million $244 million $88 million $98 million $179 million Operating cash Capital Full year FY23 share FY23 reduction flow expenditures dividends repurchases in debt Supports capital Includes growth and Remain committed to Significant amount Maint
Slide 7: Continued Leadership in Sustainability
Continued Leadership in Sustainability Progress against our 2025 Sustainability Goals ◆ Achieved 5 of our goals ahead of schedule and othersarr 1 ◆ are on track Met our goal of exporting at least 200% of the energy we imported Consistent recognition of our sustainability efforts 2 ◆ ◆ Received 3rd c
Slide 8: EVOLVE Sustainable Solutions
EVOLVE® Sustainable Solutions Holistic approach to delivering sustainable materials RENEWABLE EVOLVE Sustainable Solutions is a technology platform for delivering more sustainable reinforcing carbons RECOVERED Products powered by EVOLVE Sustainable Solutions focused on sustainable content with relia
Slide 9: Q4 2023 Financial Highlights
Q4 2023 Financial Highlights Adjusted EPS1 Cash flow from Cash Operations $238 million $1.65 $138 million Liquidity Diluted EPS $4.10 Discretionary Free Cash Flow1 of $88M $1.3 billion Capex Debt Balance Operating Tax Rate1 $78 million $1.3 billion 28% FY23 F‘24 expected to be Net debt to EBITDA1 FY
Slide 10: Reinforcement Materials Segment
Reinforcement Materials Segment Operating Performance Q4 FY2023 EBIT RESULTS FISCAL 2023 HIGHLIGHTS Q1 FY2024 OUTLOOK ◆ Unit margins improved due to ◆ Record EBIT driven by favorable ◆ Expect price and product mix to favorable pricing and product mix outcomes to the CY2023 remain strong sequentially
Slide 11: Performance Chemicals Segment
Performance Chemicals Segment Operating Performance Q4 FY2023 EBIT RESULTS FISCAL 2023 HIGHLIGHTS Q1 FY2024 OUTLOOK ◆ Less favorable product mix in the ◆ Lower volumes across all product ◆ Volumes expected to be lower specialty carbons and fumed lines, except Battery Materials sequentially primarily
Slide 12: Strong Operating Cash Flow
Strong Operating Cash Flow Outlook for continued strong cash generation enables growth investments, dividends and share repurchases FY2024 OUTLOOK KEY CAPACITY INVESTMENTS Expect continued strength in operating cash flow Reinforcement Materials Reinforcing Carbons Capacity Expansion in Indonesia New
Slide 13: 2024 Outlook
2024 Outlook 1 Adjusted EPS1 guidance $6.30 to $6.80 adjusted EPS expected for fiscal 2024 Reinforcement Materials outlook remains strong 2 Expect favorable outcome of Reinforcement Materials CY2024 customer agreements and volumes to remain stable to fiscal Q4’23 Performance Chemicals EBIT expected
Slide 14: On Track to Achieve Corporate Investor Day Objectives
On Track to Achieve Corporate Investor Day Objectives Overcoming significant macro headwinds Investor Day 2021 Assumptions Adjusted EPS⁶ CAGR of 8% - 12% Over $1B of DFCF⁶ to support growth and return cash to shareholders Capital expenditures of $200 - $300 million per year, with a focus on projects
Slide 15: Creating for Tomorrow
OUR STRATEGY Creating for Tomorrow We will leverage our strengths to lead in performance and sustainability — today and into the future. GROW INNOVATE OPTIMIZE Investing for Developing innovative Driving continuous advantaged growth. products and processes improvement in that enable a better future.
Slide 16: Strategic Priorities
Strategic Priorities Deliver financial objectives ◆ Year-over-year growth in adjusted EPS ◆ Strong operating cash flow to support capital plans and shareholder returns Invest for advantaged growth ◆ Strategic investments in Battery Materials in the US and Europe to leverage regionalized supply chain
Slide 17: Q&A
CABOT Q4 FISCAL 2023 17
Slide 18: Appendix
APPENDIX Q4 FISCAL 2023 18
Slide 19: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation includes references to adjusted earnings per share (EPS), total segment EBIT, segment EBITDA, adjusted EBITDA, free cash flow, discretionary free cash flow, and operating tax rate, which are non-GAAP measures. Reconciliations of Adjusted EPS to ne
Slide 20: Non-GAAP Financial Measures: Total Segment EBIT and Adjusted EBITDA
Non-GAAP Financial Measures Total Segment EBIT and Adjusted EBITDA Our Chief Operating Decision Maker uses segment income (loss) from continuing operations before interest and taxes (which we refer to as segment “EBIT”) to evaluate the operating results of each segment and to allocate resources to t
Slide 21: Non-GAAP Financial Measures: Segment EBITDA
Non-GAAP Financial Measures Segment EBITDA Segment EBITDA is comprised of Segment EBIT plus depreciation and amortization. Management believes that Segment EBITDA is useful supplemental information because it provides investors with a view of the cash generated by each of the Company’s segments, whi
Slide 22: Free cash flow & Discretionary free cash flow
Non-GAAP Financial Measures Free cash flow (FCF) & Discretionary free cash flow (DFCF) To calculate “Discretionary Free Cash Flow” we deduct sustaining and compliance capital expenditures and changes in Net Working Capital from cash flow from operating activities. Dollars in millions Reconciliation
Slide 23: Non-GAAP Financial Measures: Adjusted EPS
Non-GAAP Financial Measures Adjusted EPS 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.
Slide 24: Non-GAAP Financial Measures: Operating Tax Rate
Non-GAAP Financial Measures Operating Tax Rate TABLE 3: RECONCILIATION OF EFFECTIVE TAX RATE TO OPERATING TAX RATE Three months ended September 30 2023 2022 (Provision) / Benefit for (Provision) / Benefit Dollars in millions (unaudited) Income Taxes Rate for Income Taxes Rate Effective Tax Rate $ 11