Cabot : Q3 FY26 Earnings Call Slides

About this update from Cabot Corporation

CABOT CORPORATION EARNINGS TELECONFERENCE THIRD QUARTER - FISCAL 2026 Q3 Fiscal 2026 1 Executive Leadership Transition SEAN KEOHANE President & CEO (2016 -2026) ERICA McLAUGHLIN President & CEO (Effective October 1, 2026) Q3 Fiscal 2026 3 Q3 2026 Highlights Diluted EPS of $0.12; Adjusted EPS 1 of $1.67 Reinforcement Materials segment EBIT of $97 million Performance Chemicals segment EBIT of $68 million Cash Flows from Operations of $75 million Awarded Platinum rating from EcoVadis Q3 Fiscal 2026 4 1. Non-GAAP measure - See Appendix Battery Materials Platform Supporting Attractive Long-Term Growth Global Battery Demand Outlook by Applications Battery Demand Expected to More Than Double by 2030 Business Highlights Attractive Earnings Profile FY2026 EBITDA expected at approximately $40M 24% Q3 FY26 TTM EBITDA margin Diversified Growth Drivers  Leadership positions across EV, BESS and emerging applications  Growing with the leading global battery manufacturers  Non-EV applications represent ~30% of demand Attractive Earnings Profile  FY2026 EBITDA expected at approximately $40M  24% Q3 FY26 TTM EBITDA margin Other BESS EV Diversified Growth Drivers Leadership positions across EV, BESS and emerging applications Growing with the leading global battery manufacturers Non-EV applications represent ~30% of demand Consumer / 2025 2026 2027 2028 2029 2030 Source: Benchmark Minerals Intelligence, 2026 Q2 forecast Q3 Fiscal 2026 5 Battery Materials - Scaling for Growth Differentiated technology portfolio serving diverse battery applications  Industry-leading portfolio of conductive carbons, carbon nanotubes, carbon nanostructures, blends and dispersions enables tailored solutions across battery applications and optimized performance  Technical expertise, global footprint, and strong customer relationships support continued adoption across EV, BESS, consumer, and industrial battery applications Global Conductive Additives Footprint Manufacturing and technical centers located across every major battery producing region Manufacturing Capacity Technical Centers Broad Product Portfolio Differentiated technology portfolio serving diverse battery applications Industry-leading portfolio of conductive carbons, carbon nanotubes, carbon nanostructures, blends and dispersions enables tailored solutions across battery applications and optimized performance Technical expertise, global footprint, and strong customer relationships support continued adoption across EV, BESS, consumer, and industrial battery applications Expanding Capacity to Capture Battery Market Opportunities Strategic investments to support customer growth  Capacity expansions in the U.S. and China to meet expected demand growth across battery applications  Expansion leverages existing footprint, providing a capital-efficient approach for capacity additions Conductive Additives Capacity Expansion Strategic investments to support customer growth Capacity expansions in the U.S. and China to meet expected demand growth across battery applications Expansion leverages existing footprint, providing a capital-efficient approach for capacity additions Q3 Fiscal 2026 6 Q3 2026 Financial Highlights Adjusted EPS 1 $1.67 Diluted EPS $0.12 Cash & Cash Equivalents $250 Million Debt Balance $1.3 Billion Liquidity $1.3 Billion Operating Cash Flow $75 Million Discretionary Free Cash Flow 1 $91 Million YTD Operating Tax Rate 1 29% FY26 forecast range of 28%-30% Capex $38 million FY26 forecast range of $200 - $215 million 1. Non-GAAP measure - See Appendix Q3 Fiscal 2026 7 Reinforcement Materials Segment 1. Non-GAAP measure - See Appendix Q3 Fiscal 2026 8 Q4 FY26 Outlook Expect a modest sequential EBIT decline Anticipate lower seasonal volumes and less favorable regional product mix impact, particularly in EMEA Q3 FY26 Highlights Lower gross profit per ton driven by CY26 customer agreement outcomes partially offset by higher volumes and a more favorable regional product mix Volumes up 5% year-over-year with increases in Asia and the Americas Operating Performance Q3 FY26 Q3 FY25 o Segment EBIT $97M $128M (24%) Segment EBITDA 1 $117M $146M (20%) EBITDA Margin 1 20% 25% Performance Chemicals Segment 1. Non-GAAP measure - See Appendix Q3 Fiscal 2026 9 Q4 FY26 Outlook Expect segment EBIT to continue to be higher year-over-year, but lower sequentially Lower sequential EBIT projection driven by lower expected seasonal volumes and the flow through of higher raw materials Q3 FY26 Highlights Volumes increased year-over-year in the battery materials and fumed metal oxides product lines Higher gross profit per ton was primarily due to favorable product mix and price increases implemented ahead of rising material costs Operating Performance Q3 FY26 Q3 FY25 o Segment EBIT $68M $57M +19% Segment EBITDA 1 $91M $78M +17% EBITDA Margin 1 26% 24%  Tightening our fiscal 2026 Adjusted EPS 1 guidance range from $6.00 to $6.50 per share to $6.15 to $6.45 per share  Expect continued strong cash flow generation, balance sheet strength, and investment grade credit rating Fiscal 2026 financial outlook Executing our strategy and investing for growth Positioned for Continued Value Creation  Infrastructure, electronics, and energy storage remain strong growth drivers for our business  Investing in expected high-return growth projects, including conductive additive capacity expansions for battery materials  Continue to leverage operating platform of commercial and operational excellence along with global asset optimization to drive performance  Leadership transition provides continuity as we continue to execute our strategy and drive long term value creation Q3 Fiscal 2026 10 Infrastructure, electronics, and energy storage remain strong growth drivers for our business Investing in expected high-return growth projects, including conductive additive capacity expansions for battery materials Continue to leverage operating platform of commercial and operational excellence along with global asset optimization to drive performance Leadership transition provides continuity as we continue to execute our strategy and drive long term value creation Executing our strategy and investing for growth Tightening our fiscal 2026 Adjusted EPS 1 guidance range from $6.00 to $6.50 per share to $6.15 to $6.45 per share Expect continued strong cash flow generation, balance sheet strength, and investment grade credit rating Fiscal 2026 financial outlook 1. Non-GAAP measure - See Appendix QUESTIONS & ANSWERS Q3 Fiscal 2026 11 APPENDIX Q3 Fiscal 2026 12 FY26 Guidance & Modeling Assumptions Full Year Modeling Assumptions Adjusted Earnings per Share 1 Interest Expense ~$6.15 to $6.45 ~($72M) to ($75M) General Unallocated Income (Expense) ~$30M to $35M Capital Expenditures ~$200M to $215M Shares Repurchases ~$100M to $150M Operating Tax Rate 1 ~28% to 30% Forecast FX Rates July Rates Oil & Energy Prices July Forward Curve 1. Non-GAAP measure - See Appendix Q3 Fiscal 2026 13 Use of Non-GAAP Financial Measures This presentation includes references to adjusted earnings per share (EPS), 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 net income (loss) per share attributable to Cabot Corporation, the most directly comparable GAAP financial measure, Segment EBITDA and Adjusted EBITDA to I ncome (loss) from continuing 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 from operating activities, the most directly comparable GAAP financial measure, are provided in the tables included in our third quarter 2026 earnings release and filed on our Current Report on Form 8-K dated August 3, 2026. Reconciliations for segment EBITDA for each segment are included in the following slides. 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. This presentation also includes our forecast of the range we expect our "operating tax rate", which represents the tax rate on our recurring operating results, to fall within. This rate excludes discrete tax items, which are included in the effective tax rate. Discrete tax items are comprised of (i) unusual or infrequent items, (ii) items related to uncertain tax positions, and (iii) other tax items, such as the impact from the timing of losses in certain jurisdictions and cumulative tax rate adjustments, the tax impact of legislative changes and tax accruals on historic earnings due to changes in indefinite reinvested assertions. The operating tax rate also excludes the impact of the items of expense and income we identify as certain items on both our operating income and the tax provision. Management believes that the operating tax rate 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. 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. To calculate "Free Cash Flow" we deduct capital expenditures as disclosed in the consolidated statement of cash flows (as Additions to property, plant and equipment) from cash flow from operating activities. 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 liabilities. Q3 Fiscal 2026 14 Non-GAAP Financial Measures Adjusted EPS Fiscal 2026 (A) Dec. Q Mar. Q June Q Sept. Q FY 2026 Reconciliation of Adjusted EPS to GAAP EPS Net income (loss) per share attributable to Cabot Corporation Less: Certain items after tax per share Adjusted earnings (loss) per share $ 1.37 (0.16) $ 1.27 $ 0.12 (0.34) (1.55) $ - - $ 2.77 (2.05) $ 1.53 $ 1.61 $ 1.67 $ - $ 4.82 Fiscal 2025 (A) Dec. Q Mar. Q June Q Sept. Q FY 2025 Reconciliation of Adjusted EPS to GAAP EPS Net income (loss) per share attributable to Cabot Corporation $ 1.67 $ 1.69 $ 1.86 $ 0.79 $ 6.02 Less: Certain items after tax per share (0.09) (0.21) (0.04) (0.91) (1.23) Adjusted earnings (loss) per share $ 1.76 $ 1.90 $ 1.90 $ 1.70 $ 7.25 (A) Per share amounts are calculated after tax. Q3 Fiscal 2026 15 Non-GAAP Financial Measures Adjusted EBITDA Dollars in millions Fiscal 2025 Fiscal 2026 June Q June Q Reconciliation of Adjusted EBITDA to Income (loss) from operations before income taxes and equity in earnings of affiliated companies Income (loss) from operations before income taxes and equity in earnings of affiliated companies $ 155 $ 58 Interest expense 19 18 Certain items 3 78 General unallocated (income) expense (6) (5) Less: Equity in earnings of affiliated companies (1) (2) Depreciation and amortization 39 43 Adjusted EBITDA $ 211 $ 194 Q3 Fiscal 2026 16 Non-GAAP Financial Measures Segment EBITDA Dollars in millions Fiscal 2025 Fiscal 2026 June Q June Q Reinforcement Materials EBIT Reinforcement Materials Depreciation and amortization Reinforcement Materials EBITDA Reinforcement Materials Sales Reinforcement Materials EBITDA Margin $ 128 18 $ 97 20 $ 146 $ 573 $ 117 $ 599 25% 20% Dollars in millions Fiscal 2025 Fiscal 2026 June Q June Q Performance Chemicals EBIT Performance Chemicals Depreciation and amortization Performance Chemicals EBITDA Performance Chemicals Sales Performance Chemicals EBITDA Margin $ 57 21 $ 68 23 $ 78 $ 320 $ 91 $ 351 24% 26% Q3 Fiscal 2026 17 Non-GAAP Financial Measures Free Cash Flow (FCF) & Discretionary Free Cash Flow (DFCF) Dollars in millions Fiscal 2026 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 2026 Cash provided by (used in) operating activities (B) Less: Additions to property, plant and equipment Free cash flow Plus: Additions to property, plant and equipment $ 126 69 $ 77 45 $ 75 38 $ - - $ 278 152 $ 57 69 $ 32 45 $ 37 38 $ - - $ 126 152 Less: Changes in net working capital (C) Less: Sustaining and compliance capital expenditures Discretionary free cash flow 5 50 (19) 33 (44) 28 - - (58) 111 $ 71 $ 63 $ 91 $ - $ 225 (B) As provided in the Condensed Consolidated Statements of Cash Flows. (C) Defined as changes in Accounts and notes receivable, Inventories, and Accounts payable and accrued liabilities as presented on the Condensed Consolidated Statements of Cash Flows. Q3 Fiscal 2026 18 Non-GAAP Financial Measures Operating Tax Rate TABLE 3: RECONCILIATION OF EFFECTIVE TAX RATE TO OPERATING TAX RATE Three months ended June 30 2026 2025 Dollars in millions (unaudited) (Provision) / for Income Benefit Taxes (Provision) / Rate for Income Benefit Taxes Rate Effective Tax Rate $ (46) 79% $ (43) 28% Less: Non-GAAP tax adjustments (A) (4) - Operating tax rate (C) (D) $ (42) 31% $ (43) 28% Nine months ended June 30 2026 2025 (Provision) / Benefit (Provision) / Benefit Dollars in millions (unaudited) for Income Taxes Rate for Income Taxes Rate Effective Tax Rate $ (127) 43% $ (133) 29% Less: Non-GAAP tax adjustments (A) (14) (6) Operating tax rate (C) (D) $ (113) 29% $ (127) 28% (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 pretax 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 2026 is expected to be in the range of 28% to 30%. Q3 Fiscal 2026 19 Attention : This is an excerpt of the original content. To continue reading it, access the original document here .

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