Cabot : Q2 FY26 Earnings Call Slides

Published: 2026-05-06 07:48:10 ET CBT

Published on 05/06/2026 at 07:48 am EDT

CABOT CORPORATION EARNINGS TELECONFERENCE

Q2 Fiscal 2026 1

Q2 2026 Highlights

Diluted EPS of $1.27;

Adjusted EPS1 of $1.61

Reinforcement Materials segment EBIT of $93 million

Performance Chemicals segment EBIT of $59 million

Cash Flows from Operations of $77 million; returned

$73 million to shareholders

Increased quarterly dividend by 5%

Diluted EPS of $1.27;

Reinforcement Materials segment EBIT of $93 million

Performance Chemicals segment EBIT of $59 million

Q2 Fiscal 2026 3

1. Non-GAAP measure - See Appendix

Battery Materials Building Momentum

A global leader with the broadest range of conductive additives, formulations and blends

Strong quarter with 43% revenue increase over Q2'25 and Q2 FY26 TTM EBITDA margins of 24%

Ongoing customer engagement and multi-year supply agreements positioning our Battery Materials product line for long-term growth

Projecting full year fiscal 2026 EBITDA of approximately

$40 million

Continued Battery Energy Storage Systems (BESS) investment, alongside EV growth, driving strong demand for our Battery Materials portfolio

Q2 Fiscal 2026 4

Cabot Materials Support Data Center Growth

 Long Duration Storage

 Power Stabilization

 Uninterruptable Power

Long Duration Storage

Power Stabilization

Uninterruptable Power

Cabot Battery Materials Enable Critical Performance Requirements

Data Center

Critical materials enabling data center infrastructure buildout

 Power Distribution Cables

 Thermal Management

 Adhesives & Sealants

 Bonding Paste for Wind Turbines

Power

Distribution

Renewable

Energy Sources

Computing &

Data Storage

Battery Energy

Storage Systems (BESS)

Power Distribution Cables

Thermal Management

Adhesives & Sealants

Bonding Paste for Wind Turbines

Broader Performance Chemicals Portfolio Plays Key Role in Infrastructure Buildout

Q2 Fiscal 2026 5

Optimization of Cabot's Plant Network

Intention to close manufacturing capacity at targeted locations, subject to consultation processes where applicable

Expect to maintain customer supply from other Cabot locations

Intend to rationalize multiple manufacturing lines at Netherlands facility, subject to consultation processes

Have ceased manufacturing at Argentina facility and initiated plans to close the facility

Program Financial Highlights

Target Annual Run Rate Benefit

$22 million

Q2 Fiscal 2026 6

Expected Restructuring Cash Cost $24 million

Q2 2026 Financial Highlights

$1.61

$1.27

$252 Million

$1.3 Billion

$77 Million Discretionary Free Cash Flow1

$63 Million

FY26 forecast range of 27%-29%

$45 million

FY26 forecast range of $200 - $230 million

1. Non-GAAP measure - See Appendix

Q2 Fiscal 2026 7

Reinforcement Materials Segment

1. Non-GAAP measure - See Appendix

Q2 Fiscal 2026 8

Expect higher sequential EBIT from higher gross profit per ton and full quarter of operations of acquired plant in Mexico

Sequential margin benefit expected from a favorable product mix and yield improvements

Lower gross profit per ton driven by CY26 customer agreement outcomes and increased competitive intensity in Asia Pacific

Volumes up 3% year-over-year with increases in all regions

Operating Performance

Q2 FY26

Q2 FY25

Segment EBIT

$93M

$131M

(29%)

Segment EBITDA1

$114M

$148M

(23%)

EBITDA Margin1

21%

25%

Performance Chemicals Segment

1. Non-GAAP measure - See Appendix

Q2 Fiscal 2026 9

Expect segment EBIT to be relatively consistent sequentially

Anticipate stable volumes and gross profit per ton sequentially

Higher gross profit per ton from a favorable product mix and optimization efforts

Volumes increased year-over-year in the battery materials and specialty carbons product lines

Operating Performance

Q2 FY26

Q2 FY25

Segment EBIT

$59M

$50M

+18%

Segment EBITDA1

$82M

$71M

+15%

EBITDA Margin1

25%

23%

Middle East Developments

Q2 Fiscal 2026 10

Cabot is well positioned to navigate challenging business conditions

Competitive Advantages & Actions Taken

Limited direct revenue and raw material sourcing

exposure to the Middle East

Competitive global asset footprint to support customers

Reinforcement Materials customer agreements structured to pass through raw material cost impacts

Implemented price increases across Performance Chemicals

Have ample liquidity to fund working capital needs

Effectively Navigating a Dynamic Environment

Reaffirming Adjusted EPS1 Guidance Range of $6.00 - $6.50

Expect stable margins as price increases offset higher input costs

Range contemplates different demand scenarios in the fourth quarter due to the conflict in the Middle East

Battery materials product line building momentum

Targeted capacity rationalizations to better align production with current demand and improve network efficiency

Continuing our countermeasure program, with a focus on efficiency initiatives and procurement savings to offset headwinds

Continue to invest in maintaining world class assets and driving strategic growth investments

Executed $101M in share repurchases YTD FY26

Raised dividend by 5%

Investment grade credit rating

1.5x2 Net Debt/EBITDA ratio as of March 31, 2026

Non-GAAP measure - See Appendix 2. Calculated in accordance with the terms of the debt covenant calculation in Cabot's revolving credit facility

Q2 Fiscal 2026 11

QUESTIONS & ANSWERS

Q2 Fiscal 2026 12

APPENDIX

Q2 Fiscal 2026 13

FY26 Guidance & Modeling Assumptions

Full Year Modeling Assumptions

Adjusted Earnings per Share1 Interest Expense

~$6.00 to $6.50

~($71M) to ($75M)

General Unallocated Income (Expense)

~$30M to $34M

Capital Expenditures

~$200M to $230M

Shares Repurchases

~$100M to $150M

Operating Tax Rate1

~27% to 29%

Forecast FX Rates

April Rates

Oil & Energy Prices

April Forward Curve

Non-GAAP measure - See Appendix

Q2 Fiscal 2026 14

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 Income (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 second quarter 2026 earnings release and filed on our Current Report on Form 8-K dated May 5, 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.

Q2 Fiscal 2026 15

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 $ - (0.34) -

$ -

$ 2.64

(0.50)

$ 1.53

$ 1.61 $ -

$ -

$ 3.14

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.

Q2 Fiscal 2026 16

Non-GAAP Financial Measures Adjusted EBITDA

Dollars in millions

Fiscal 2025

Mar. Q

Fiscal 2026

Mar. 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

$ 151

$ 120

Interest expense

Certain items

General unallocated (income) expense

(9)

(12)

Less: Equity in earnings of affiliated companies

(3)

(2)

Depreciation and amortization

Adjusted EBITDA

$ 206

$ 181

Q2 Fiscal 2026 17

Non-GAAP Financial Measures Segment EBITDA

Dollars in millions

Fiscal 2025

Mar. Q

Fiscal 2026

Mar. Q

Reinforcement Materials EBIT

Reinforcement Materials Depreciation and amortization

$ 131

$ 93

Reinforcement Materials EBITDA

Reinforcement Materials Sales

$ 148

$ 594

$ 114

$ 544

Reinforcement Materials EBITDA Margin

25% 21%

Dollars in millions

Fiscal 2025

Mar. Q

Fiscal 2026

Mar. Q

Performance Chemicals EBIT

$ 50

$ 59

Performance Chemicals Depreciation and amortization

Performance Chemicals EBITDA

$ 71

$ 82

Performance Chemicals Sales

$ 311

$ 328

Performance Chemicals EBITDA Margin

23% 25%

Q2 Fiscal 2026 18

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

$ 77

$ -

$ 203

114

$ 57

$ 32

$ -

$ 89

114

Less: Changes in net working capital (C)

Less: Sustaining and compliance capital expenditures

Discretionary free cash flow

(19)

(14)

$ 71

$ 63

$ -

$ 134

(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.

Q2 Fiscal 2026 19

Non-GAAP Financial Measures Operating Tax Rate

TABLE 3: RECONCILIATION OF EFFECTIVE TAX RATE TO OPERATING TAX RATE

Three months ended March 31 2026 2025

(Provision) /

Benefit for

(Provision) / Benefit

Dollars in millions (unaudited)

Income Taxes

Rate

for Income Taxes

Rate

Effective Tax Rate

$ (44)

37% $

(49)

32%

Less: Non-GAAP tax adjustments(A)

(8)

(7)

Operating tax rate (C) (D)

$ (36)

28% $

(42)

27%

Six months ended March 31 2026 2025

(Provision) /

Benefit for (Provision) / Benefit

Dollars in millions (unaudited) Income Taxes Rate for Income Taxes Rate

Effective Tax Rate

$ (81)

34% $

(90)

30%

Less: Non-GAAP tax adjustments(A)

(10)

(6)

Operating tax rate (C) (D)

$ (71)

28% $

(84)

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 27% to 29%.

Q2 Fiscal 2026 20

Disclaimer

Cabot Corporation published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 06, 2026 at 11:47 UTC.