Cabot Corporation Q4 FY2025 earnings call

• Investor Relations Leadership: Robert Rist to step into the role of Vice President of Investor Relations and Corporate Planning, succeeding Steve Delahunt. - Fiscal 2025 Highlights: Delivered record adjusted EPS of $7.25 (+3% Y/Y), adjusted EBITDA of $804M (+3% Y/Y, 22% margin), strong cash flow, and maintained a strong balance sheet (net debt-to-EBITDA 1.2x, liquidity $1.5B). - Acquisition: Entered into a definitive agreement to acquire Bridgestone's reinforcing carbon plant in Mexico, expected to close in Q2 FY2026 and be accretive in the first year. - Performance Chemicals: Strength in targeted applications (infrastructure, alternative energy, digitalization, consumer-driven), with fumed silica for CMP showing double-digit growth in 2025. - Sustainability: Received a Platinum rating from EcoVadis for the fifth consecutive year, published the 2025 sustainability report, and unveiled 2030 sustainability targets. - Battery Materials: Launched a new conductive carbon product for energy storage systems, saw strong volume growth in high-performance conductive additive blends, and has a positive outlook for the lithium-ion battery market growth.

Reinforcement Materials: Fourth quarter EBIT decreased by $4M compared to the same period last year, primarily due to lower volumes (down 5% Y/Y). Fiscal year 2025 EBIT was $29M below the prior year, driven by 5% lower volumes. For the first quarter of fiscal 2026, a sequential decrease in EBIT of approximately $15M to $20M is expected. Performance Chemicals: Fourth quarter EBIT decreased by $2M Y/Y due to lower volumes. Fiscal year 2025 EBIT was $30M higher than the prior year, driven by higher volumes in fumed metal oxides and battery materials product lines. The first quarter of fiscal 2026 is expected to have EBIT relatively consistent with the fourth quarter, with modest sequential volume improvement offset by higher costs.

• Fiscal 2026 adjusted EPS expected between $6 and $7, with the lower end reflecting weak demand and pricing pressures, and the higher end driven by volumes, optimization, cost savings, and growth investments. - Reinforcement Materials: Expect contract outcomes to be lower than the prior year, with challenging negotiations due to customer challenges from Asian tire imports and macroeconomic uncertainty. - Performance Chemicals: Anticipate trends from 2025 to continue, with positive demand in Asia, challenges in Americas and Europe, but growth in battery materials and other targeted sectors. - Cash flow: Expected to remain strong, net debt-to-EBITDA similar to 2025, capital expenditures between $200M to $250M, and dividend and share repurchases in the range of $100M to $200M.

• Macro factors: Turbulent macroeconomic, geopolitical, and global trade environment. - Trade: Persistent Asian tire imports impacting Western markets, uncertainty in trade policy and its effect on end markets. - End markets: Automotive and construction sectors in cyclical trough, delayed interest rate cuts affecting housing and construction. - Tire imports: Uncertainty regarding the impact of Asian tire imports on tire production volumes in Western markets and the effect of trade actions.

Q: Are you seeing any volatility in your rubber black operating rates regionally? Or is it relatively stable?

A: Yes, it's largely stable, but impacted by elevated tire imports from Asia.

Q: Are you being impacted at all by Dow's silicone rationalization efforts in Europe?

A: In discussions with Dow on exactly how they'll perform against the long-term agreement that goes out through the end of 2028.

Q: How much do you expect 2026 prices to be down or expectations by region, and what percentage of negotiations have been settled?

A: Roughly 25% of contracts have been settled, behind where we were at this time last year. Can't comment on final outcomes as negotiations are ongoing.

Q: Could you elaborate on the underlying assumptions for Performance Chemicals guidance in terms of volume and growth expectations?

A: Volumes expected up in 2026, with mix balanced, some headwinds offset by growth in targeted applications like battery materials.

Q: How did regional utilization rates shake out during the quarter, maybe by region?

A: North America utilizations 75%-80%, Europe ~85%, South America 70s, Asia Pacific high utilizations, with utilizations influenced by tire imports and trade actions.