Cabot Corporation Q2 FY2026 earnings call

Sean mentioned strong execution in the second quarter despite challenging environment. Iran conflict introduced geopolitical uncertainty. Reinforcement Materials and Performance Chemicals segments' performance. Battery materials business as a strategic growth driver with 43% revenue growth. Network optimization initiatives including cost reduction programs, capital expenditure adjustment, and capacity rationalization actions. Response to Middle East geopolitical and energy market dynamics.

Reinforcement Materials: EBIT was $93 million in the second quarter, down 29% year-over-year. Volume grew 3% year-over-year, but gross profit per ton decreased due to 2026 customer agreement outcomes and increased competitive intensity in Asia Pacific. Performance Chemicals: EBIT was $59 million, up 18% year-over-year. Driven by continued momentum in high-value battery materials and specialty carbons product lines, and higher gross profit per ton from improved product mix and optimization efforts. Battery materials revenue grew 43% year-over-year.

Reaffirmed adjusted earnings per share guidance for full fiscal year 2026 in the range of $6 to $6.50 per share. Demand level is a key variable. Capacity rationalization actions and cost measures to enhance competitiveness and long-term success.

Risks include geopolitical conflict in the Middle East possibly affecting demand and supply chain, energy price increase affecting input costs, and intensifying market competition affecting margins.

First question from John Roberts of Mizuho: asked about softening of consumer demand and lag in segments. Sean responded on segment differences in value chain lag. Second question from Lawrence Alexander of Jefferies: asked about mix tailwind in Q3 and trade flows in reinforcement materials. Sean responded on customer mix and trade flow dynamics. Third question from Joshua Spector of UBS: asked about performance chemical mix shift and price increase. Sean responded on mix uplift and pricing response. Fourth question from David Begleder of Deutsche Bank: asked about battery materials EBITDA margins and volume growth. Sean responded on battery materials margins and growth factors. Fifth question: asked about volume growth in reinforcement materials. Sean responded on volume growth drivers.