Cabot Corporation — Fourth Quarter and Fiscal Year 2026 Earnings Summary

Financial Performance:

• Net sales for the fourth quarter of fiscal 2026 were $1,009 million, up from $899 million in the prior year period; fiscal year 2026 net sales totaled $3,744 million compared to $3,713 million in fiscal 2025.
• Diluted earnings per share (EPS) for the fourth quarter were $1.25, compared to $0.79 in the prior year; fiscal year diluted EPS was $4.02, down from $6.02 in fiscal 2025.
• Adjusted EPS for the fourth quarter was $1.61, compared to $1.70 in the prior year; fiscal year adjusted EPS was $6.42, down from $7.25 in fiscal 2025.
• Net income attributable to Cabot Corporation for the fourth quarter was $66 million, compared to $43 million in the prior year; fiscal year net income was $213 million, down from $331 million in fiscal 2025.
• Cash flows from operating activities for the fourth quarter were $143 million, compared to $219 million in the prior year; fiscal year operating cash flow was $421 million, down from $665 million in fiscal 2025.
• Capital expenditures for the fourth quarter were $55 million; fiscal year capital expenditures totaled $207 million, compared to $274 million in fiscal 2025.
• The company ended the fourth quarter with $254 million in cash and cash equivalents and $1.5 billion in available liquidity.
• Net debt to EBITDA ratio was 1.4 times as of September 30, 2026.
• Fiscal year 2026 cash flows from operations enabled $97 million in dividends and $146 million in share repurchases.

Guidance and Future Outlook:

• Adjusted EPS for fiscal 2027 is expected to be in the range of $6.15 to $6.75.
• The operating tax rate for fiscal 2027 is expected to be in the range of 28% to 30%.
• The company anticipates increasing volumes in key growth markets, including battery materials and electronics, as well as with strategic customer accounts.
• Management expects to maintain solid margins while managing volatile energy input costs and competitive pressures.
• The company plans to complete previously announced restructuring actions, implement optimization activities, and invest in yield technology to improve network competitiveness.

Business Segments and Product Lines:

• Reinforcement Materials:
  • Segment EBIT for the fourth quarter was $87 million, a decrease of $32 million compared to the prior year; fiscal year EBIT was $379 million, down from $508 million.
  • Global volumes increased 5% in the fourth quarter, driven by higher volumes in Asia Pacific (10%) and the Americas (3%), partially offset by a 7% decline in Europe, Middle East, and Africa.
  • Gross profit per ton declined due to calendar year 2026 customer agreements and less favorable regional product mix.
  • Sales for the fourth quarter were $634 million; fiscal year sales were $2,297 million.
• Performance Chemicals:
  • Segment EBIT for the fourth quarter was $60 million, an increase of $18 million compared to the prior year; fiscal year EBIT was $235 million, up from $194 million.
  • Higher EBIT was driven by favorable product mix, lower costs, and increased volumes in battery materials and specialty carbons.
  • Sales for the fourth quarter were $340 million; fiscal year sales were $1,319 million.
• Battery Materials:
  • Achieved $43 million of EBITDA for fiscal 2026, a new high for the product line.
  • Signed a $50 million grant agreement with the U.S. Department of Energy to support expansion of domestic production of advanced conductive additives at facilities in Louisiana and Texas.

Market and Competitive Landscape:

• The company operates in a dynamic macroeconomic environment with volatile energy input costs and competitive pressures.
• Growth is being driven by demand for battery energy storage systems, electric vehicles, and other specialty battery applications.
• Volume growth in Reinforcement Materials was supported by capacity additions in Indonesia and an acquisition in Mexico.

Risks and Challenges:

• Risks include industry capacity utilization, shifts in the geographic area of tire production, and competition from other specialty chemical companies.
• Potential impacts from safety, health, and environmental requirements, as well as regulatory and financial risks related to climate change.
• Volatility in the price and availability of energy and raw materials, including impacts from the Russian invasion of Ukraine and conflict in the Middle East.
• Risks associated with management transitions, failure to achieve growth expectations from capacity additions, and unanticipated delays or cost increases in site development projects.
• Litigation, legal proceedings, and the accuracy of assumptions regarding reserves for respirator claims.

Management Commentary and Tone:

• Erica McLaughlin, President and CEO, expressed pleasure with the strong execution of teams despite a difficult macroeconomic backdrop.
• McLaughlin highlighted the strong fourth quarter performance driven by the Performance Chemicals segment and the milestone achievement in Battery Materials.
• She expressed excitement about leading the company in its next phase of growth, citing the strength of businesses, quality of people, and differentiated portfolio positions.
• Management remains confident in the ability to execute, generate strong operating cash flow, and maintain a balanced capital allocation framework.

Other Key Points:

• The company recorded a $50 million grant agreement with the U.S. Department of Energy for battery materials expansion.
• Fiscal year 2026 included $146 million in share repurchases and $97 million in dividend payments.
• The effective tax rate for the fourth quarter was 34%, while the operating tax rate for the full year was 29%.
• Certain items for the fourth quarter included $15 million in pre-tax charges, primarily related to global restructuring activities.
• Fiscal year 2026 certain items totaled $109 million pre-tax, including $72 million in global restructuring activities and $30 million in employee benefit plan settlements.
• The company completed an acquisition in Mexico during the fiscal year, contributing to volume growth in the Reinforcement Materials segment.