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    CBT
    Earnings call· Jun 2026(Q3 FY26)

    CABOT Q3 FY26 earnings call CBT

    Aug 4, 2026 Source

    Executive summary

    Cabot Q3 FY26 — Strong Performance Chemicals and Battery Materials Growth

    Cabot delivered solid Q3 FY26 results, driven by strong Performance Chemicals performance and rapid scaling of Battery Materials, despite challenging market conditions and raw material volatility. The company is navigating a dynamic environment with disciplined execution, strategic investments in battery materials capacity, and a focus on long-term value creation, while also managing a planned CEO transition.

    Highlights

    5

    • Adjusted EPS of $1.67, an increase of 4% sequentially.

    • Performance Chemicals segment EBIT of $68 million, up 19% year-over-year.

    • Reinforcement Materials global volumes increased 5% year-over-year, with Asia Pacific up 10% and Americas up 4%.

    • Battery Materials EBITDA reaffirmed at approximately $40 million for FY26, with trailing 12-month EBITDA margins of approximately 24%.

    • Received Platinum sustainability rating from EcoVadis for the sixth consecutive year, placing Cabot among the top 1% of companies in its category.

    Concerns

    4

    • Reinforcement Materials EBIT of $97 million, down from $128 million in the prior year quarter, primarily due to lower gross profit per ton from 2026 annual tire customer agreements.

    • Higher net working capital of approximately $44 million associated with rapidly rising raw material costs.

    • Expected modest sequential decline in Reinforcement Materials EBIT in Q4 due to lower seasonal demand and less favorable regional product mix.

    • Expected lower seasonal volumes and normalization of gross profit per ton in Performance Chemicals in Q4 as raw material costs catch up to pricing actions.

    Guidance & targets

    4
    CategoryTargetConfidence
    Adjusted Earnings Per Share
    $6.15 to $6.45 per share
    high materiality
    Medium
    Operating Tax Rate
    28% to 30%
    medium materiality
    Medium
    Capital Expenditures
    $200 million to $215 million
    high materiality
    High
    Battery Materials EBITDA
    approximately $40 million
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Reinforcement Materials
    Year-over-year decline in earnings was primarily driven by lower gross profit per ton resulting from 2026 annual tire customer agreements. These impacts were partially offset by higher volumes and a more favorable regional product mix. Americas volumes benefited from the Mexico acquisition and higher base business volumes. Asia Pacific volumes benefited from new capacity in Indonesia and underlying demand, plus an easier comparison to a particularly weak Q3 FY25 in China.
    EBITDA: $117 millionEBITDA margin: 20%Global volumes growth YoY: 5%Asia Pacific volumes growth YoY: 10%Americas volumes growth YoY: 4%
    		———EBIT $97 million
    Performance Chemicals
    Strong quarter with EBIT increasing by $11 million year-over-year, driven by both higher volumes and higher gross profit per ton. Volume growth was led by battery materials (electric vehicle and battery energy storage applications) and fumed metal oxides (electronics-related applications). Gross profit per ton improved due to a favorable product mix and proactive pricing actions implemented ahead of rising raw material costs.
    EBIT growth YoY: $11 millionVolume growth: led by battery materials and fumed metal oxidesGross profit per ton: improved compared to prior year
    		———EBIT $68 million

    Operational metrics

    16
    Adjusted Earnings Per Share
    $1.67up 4% sequentially
    Q3 FY26

    Reflects solid execution by the team.

    Net Working Capital Impact
    $44 millionhigher
    Q3 FY26

    Associated with rapidly rising raw material costs.

    Dividends Paid
    $24 million
    Q3 FY26

    Returned to shareholders consistent with balanced capital allocation framework.

    Share Repurchases
    $101 million
    YTD FY26

    Repurchased thus far during the fiscal year; no repurchases in Q3.

    Cash and Cash Equivalents
    $250 million
    as of June 30

    Ended the quarter with this balance.

    Liquidity Position
    approximately $1.3 billion
    as of June 30

    Remains strong.

    Debt Balance
    approximately $1.3 billion
    as of June 30

    Debt balance at quarter end.

    Net Debt-to-EBITDA Ratio
    1.4x
    as of June 30

    Ratio at quarter end.

    Operating Tax Rate
    29%
    YTD FY26

    Year-to-date operating tax rate.

    Battery Materials EBITDA Margin
    approximately 24%
    TTM as of Q3 FY26

    Attractive earnings from the product line.

    EU Tire Imports Decline
    down 16%vs. same period in 2025
    YTD through April 2026

    Following EU antidumping duties on Chinese tire imports; trend is encouraging and supportive of market fundamentals.

    North America Tire Imports Decline
    down 3%vs. same period in 2025
    YTD through April 2026

    Overall trend encouraging and supportive of market fundamentals.

    US Tire Imports Decline
    down 2%vs. same period in 2025
    YTD through April 2026

    Overall trend encouraging and supportive of market fundamentals.

    Performance Chemicals Volume Growth
    low single digits
    FY26

    Expected for the current fiscal year, balancing headwinds and tailwinds.

    Performance Chemicals Volume Growth (Normalized)
    1.5 to 2x GDP
    Long-range

    Expected growth rate for the portfolio in a normalized environment.

    Fumed Metal Oxides Volume Growth
    increased
    Q3 FY26

    Due to higher demand in electronics-related applications.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price split—
    Productivity cost savings program—

    Orderbook & backlog

    1
    Infrastructure Applications Order Backlog (Wire and Cable)recordQ3 FY26

    Driven by grid renewal, alternative energy growth, and power demand from the AI super cycle, which is driving demand for conductive carbons and compounds.

    Deals & partnerships

    1
    UndisclosedAcquisition of an asset in Mexico

    The recently acquired asset in Mexico contributed to the 4% year-over-year volume increase in the Americas for the Reinforcement Materials segment.

    Capital programs

    1
    Battery Materials Conductive Additive Capacity Expansionunderwayapproximately $125 million

    Benefit: new conductive additive capacity

    Program advanced in Q3 FY26. Redefined from a previously contemplated greenfield facility in Michigan to brownfield capacity additions at 2 existing U.S. manufacturing sites, plus investments in China. This approach provides flexibility and capital efficiency to support customer growth and synchronize capacity with customer start-up dates. This allocation of growth CapEx is already contemplated in the total CapEx envelope.

    Risks & headwinds

    5
    Lower gross profit per ton in Reinforcement MaterialsQ3 FY26

    EBIT down from $128 million to $97 million YoY

    Mitigation: Operational performance focus, process technology expertise, customer engagement, restructuring and other cost actions.

    Raw material cost volatilityOngoing

    $44 million higher net working capital in Q3 FY26

    Mitigation: Disciplined execution, proactive pricing actions, managing factors within control.

    Geopolitical uncertainty and mixed demandNear-term dynamics

    Impacts reflected in adjusted EPS guidance assumptions

    Mitigation: Adapting to changing market conditions, supporting customers, advancing strategic initiatives.

    Reinforcement Materials Q4 seasonal declineQ4 FY26

    Expected modest sequential decline in EBIT

    Performance Chemicals Q4 seasonal decline and margin normalizationQ4 FY26

    Gross profit per ton expected to normalize

    What to watch in Q4 FY26

    5

    Public Bond Refinancing

    Q4 FY26
    CurrentPublic bond matures in September
    TargetRefinancing completed

    Why it matters

    Ensures continued financial flexibility and disciplined liquidity management.

    In the fourth quarter, we expect to refinance our public bond, which matures in September.

    Q&A highlights

    8

    How is Cabot managing pricing for Specialty Carbons given oil volatility, and will they hold prices until oil settles?

    Management stated they have a strong track record of managing pricing in dynamic raw material environments, as demonstrated by Q3 execution. They expect margins to normalize in Q4 as higher raw material costs catch up with pricing actions. Pricing is based on value delivered but must respond to raw material movements.

    “As we move forward, we would expect margins to normalize in Q4 as the higher raws catch up. with the pricing. That said, the environment is very, very dynamic. And so we remain on guard here and make sure that we're moving appropriately to manage pricing as oil moves.”

    asked by John Ezekiel Roberts · answered by Sean Keohane

    2 min read6 chapters

    Detailed Narrative

    01

    Leadership Transition

    Sean Keohane announced his retirement as President and CEO effective September 30, 2026, after nearly 25 years with Cabot. Erica McLaughlin, current CFO and Head of Corporate Strategy, has been appointed as the next President and CEO, effective upon Keohane's retirement. A search for a new CFO has been initiated. This transition is described as a thoughtful and well-planned succession process, providing continuity in strategy and execution for the company's next phase of growth.

    02

    Battery Materials Growth Strategy

    Battery Materials is a key part of Cabot's growth strategy, fueled by strong underlying market momentum. Global battery demand is expected to more than double by the end of the decade, driven by electric vehicles, battery energy storage systems, and emerging applications like drones and robotics. Approximately 30% of current demand is derived from non-EV applications. Cabot aims to capitalize on this broad-based growth through its diverse product portfolio and global manufacturing footprint, which enables it to support customers as they localize battery production.

    03

    Sustainability Recognition

    Cabot earned a Platinum sustainability rating from EcoVadis for the sixth consecutive year, placing it among the top 1% of companies in the basic chemicals manufacturing category. EcoVadis is the world's largest provider of business sustainability ratings, assessing over 150,000 companies globally. This recognition reflects Cabot's continued commitment to transparency and responsible business practices, providing independent validation of its sustainability performance to customers and stakeholders.

    04

    Reinforcement Materials Market Dynamics

    The Reinforcement Materials segment delivered $97 million EBIT despite challenging market conditions and pricing headwinds from 2026 annual tire customer agreements. Global volumes increased 5% year-over-year, with Asia Pacific up 10% and Americas up 4%, benefiting from new capacity in Indonesia and the recently acquired asset in Mexico. The EU's implementation of antidumping duties (24-45%) on Chinese tire imports, with potential countervailing duties by August/December, is seen as a positive development for the European tire industry.

    05

    Performance Chemicals End-Market Trends

    The Performance Chemicals segment is experiencing mixed demand across its end markets. While battery materials, infrastructure applications (wire and cable), and electronics (semiconductors, AI-driven demand) show strong tailwinds, automotive OE production and housing/construction are facing headwinds. Overall, the segment is expected to achieve low single-digit volume growth this fiscal year. In a normalized environment, the portfolio is anticipated to grow at approximately 1.5 to 2 times GDP.

    06

    Capital Allocation Framework

    Cabot remains committed to a balanced capital allocation framework. This includes maintaining its world-class asset base, funding high-confidence growth projects such as battery materials, and returning cash to shareholders through dividends and share repurchases. The company also prioritizes preserving balance sheet strength and financial flexibility, as evidenced by its strong liquidity position and plans to refinance its public bond maturing in September.

    AI-generated summary of the company’s earnings call. Not investment advice.