Cabot Corporation (CBT) Q2 2026 profit falls as it launches major restructuring
Cabot Corporation reported lower results for the quarter ended March 31, 2026. Net sales were $904 million versus $936 million a year earlier, and net income attributable to Cabot fell to $68 million, or $1.27 per diluted share, from $94 million, or $1.69.
Performance was pressured by weaker pricing and product mix in the Reinforcement Materials segment, partly offset by higher earnings in Performance Chemicals and initial contribution from the $68 million MXCB acquisition in Mexico. Cabot also initiated and approved restructuring actions, including plant closures in Europe and Argentina, with expected pre-tax charges of about $79 million and future cash outlays of $24 million.
Positive
- None.
Negative
- Significant earnings decline versus prior year: Quarterly net income attributable to Cabot fell to $68 million (diluted EPS $1.27) from $94 million (diluted EPS $1.69), driven mainly by lower gross profit per ton and weaker pricing in Reinforcement Materials.
- Large restructuring program with plant closures: Cabot expects about $79 million in pre-tax restructuring charges tied to ceasing operations in Campana, Argentina and closing units in Botlek, Netherlands, with $24 million of future cash outlays and operational consolidation risk.
Insights
Quarter shows margin pressure in Reinforcement Materials and sizable new restructuring charges.
Cabot’s quarterly net sales declined to $904 million from $936 million, while net income attributable to the company dropped to $68 million from $94 million. The key driver was Reinforcement Materials, where Segment EBIT fell to $93 million from $131 million on less favorable pricing and product mix and increased competition in Asia Pacific.
By contrast, Performance Chemicals delivered Segment EBIT of $59 million, up from $50 million, helped by better product mix, cost measures and stronger demand in battery materials and specialty carbons. The MXCB acquisition added about $12 million of revenue in the quarter, modestly supporting volumes in Reinforcement Materials.
Strategically, Cabot is reshaping its footprint. It plans to cease production of fumed silica in Barry, Wales and has committed to close its Campana, Argentina plant and certain Botlek, Netherlands units. These actions are expected to generate roughly $79 million in pre-tax charges, mostly in fiscal 2026–2027, with $24 million of cash outflows, and may influence margins and capacity utilization once completed.
Key Figures
Key Terms
Segment EBIT financial
One Big Beautiful Bill Act financial
Accumulated Other Comprehensive Income financial
net investment hedge financial
supply chain finance agreements financial
Certain items financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The Company had
INDEX
Part I. |
Financial Information |
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Item 1. |
Financial Statements (unaudited) |
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Consolidated Statements of Operations |
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Consolidated Statements of Comprehensive Income (Loss) |
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Consolidated Balance Sheets |
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Consolidated Statements of Cash Flows |
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Consolidated Statements of Changes in Stockholders’ Equity |
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Notes to the Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Quantitative and Qualitative Disclosures About Market Risk |
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Controls and Procedures |
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Part II. |
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Item 2. |
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Other Information |
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Item 6. |
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Part I. Financial Information
Item 1. Financial Statements
CABOT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
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Gross profit |
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Selling and administrative expenses |
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Research and technical expenses |
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Interest and dividend income |
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Interest expense |
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Income (loss) from operations before income taxes |
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Equity in earnings of affiliated companies, net of tax |
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Net income (loss) |
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Net income (loss) attributable to noncontrolling interests, net |
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Net income (loss) attributable to Cabot Corporation |
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Weighted-average common shares outstanding: |
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Earnings (loss) per common share: |
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Diluted |
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The accompanying notes are an integral part of these consolidated financial statements.
3
CABOT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED
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Three Months Ended March 31 |
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Net income (loss) |
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Other comprehensive income (loss), net of tax |
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Foreign currency translation adjustment, net of tax |
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(Gains) losses reclassified to interest expense, net of tax |
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(Gains) losses excluded from effectiveness testing and amortized to interest expense, net of tax |
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Pension and other post-retirement benefit liability adjustments, net of tax |
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Other comprehensive income (loss), net of tax (provision) benefit of $( |
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Comprehensive income (loss) |
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Net income (loss) attributable to noncontrolling interests, net |
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Comprehensive income (loss) attributable to noncontrolling interests |
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Comprehensive income (loss) attributable to Cabot Corporation |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
CABOT CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
UNAUDITED
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March 31, 2026 |
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September 30, 2025 |
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Current assets: |
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Cash and cash equivalents |
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Accounts and notes receivable, net of reserve for doubtful |
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Inventories: |
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Raw materials |
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Finished goods |
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Other |
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Total inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment |
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Accumulated depreciation |
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Net property, plant and equipment |
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Goodwill |
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Equity affiliates |
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Intangible assets, net |
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Deferred income taxes |
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Other assets |
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Total assets |
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The accompanying notes are an integral part of these consolidated financial statements.
5
CABOT CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
UNAUDITED
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March 31, 2026 |
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September 30, 2025 |
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(In millions, except share |
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and per share amounts) |
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Current liabilities: |
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Short-term borrowings |
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Accounts payable and accrued liabilities |
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Income taxes payable |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt |
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Deferred income taxes |
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Other liabilities |
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Contingencies (Note F) |
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Stockholders' equity: |
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Preferred stock: |
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Authorized: |
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Common stock: |
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Authorized: |
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Less cost of |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income (loss) |
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Total Cabot Corporation stockholders' equity |
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Noncontrolling interests |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
6
CABOT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
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Six Months Ended March 31 |
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2025 |
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(In millions) |
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Cash Flows from Operating Activities: |
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Net income (loss) |
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Adjustments to reconcile net income (loss) to cash provided by operating activities: |
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Depreciation and amortization |
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Deferred tax provision (benefit) |
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Equity in earnings of affiliated companies |
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Share-based compensation |
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Other non-cash (income) expense |
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Cash dividends received from equity affiliates |
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Changes in assets and liabilities: |
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Accounts and notes receivable |
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Inventories |
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Prepaid expenses and other assets |
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Accounts payable and accrued liabilities |
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Income taxes payable |
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Other liabilities |
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Cash provided by (used in) operating activities |
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Cash Flows from Investing Activities: |
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Additions to property, plant and equipment |
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Cash paid for asset acquisition |
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Cash paid for acquisition of business, net of cash acquired $ |
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Other |
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Cash provided by (used in) investing activities |
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Cash Flows from Financing Activities: |
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Proceeds from short-term borrowings (original maturities greater than 90 days) |
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Repayments of short-term borrowings (original maturities greater than 90 days) |
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Proceeds from (repayments of) short-term borrowings, net (original maturities 90 |
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Proceeds from issuance (repayments) of commercial paper, net |
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Proceeds from long-term debt |
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Repayments of long-term debt |
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Purchases of common stock |
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Proceeds from sales of common stock |
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Cash dividends paid to noncontrolling interests |
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Cash dividends paid to common stockholders |
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Cash provided by (used in) financing activities |
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Effects of exchange rate changes on cash and cash equivalents |
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Increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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The accompanying notes are an integral part of these consolidated financial statements.
7
CABOT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
UNAUDITED
(In millions, except shares in thousands and per share amounts)
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Common Stock, Net of Treasury Stock |
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Additional |
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Retained |
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Accumulated Other Comprehensive |
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Total Cabot Corporation Stockholders’ |
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Noncontrolling |
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Total Stockholders’ |
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Shares |
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Cost |
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Capital |
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Earnings |
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Income (Loss) |
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Equity |
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Equity |
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Balance at September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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Total other comprehensive income (loss), net of tax |
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Cash dividends paid on Common stock, |
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Cash dividends declared to noncontrolling interests |
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— |
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Issuance of stock under equity compensation plans |
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— |
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Share-based compensation |
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Purchase and retirement of common stock |
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Balance at December 31, 2025 |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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Total other comprehensive income (loss), net of tax |
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( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||||
Cash dividends paid on Common stock, |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Cash dividends declared to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|||||
Issuance of stock under equity compensation plans |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
CABOT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
UNAUDITED
(In millions, except shares in thousands and per share amounts)
|
|
Common Stock, Net of Treasury Stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated Other Comprehensive |
|
|
Total Cabot Corporation Stockholders’ |
|
|
Noncontrolling |
|
|
Total Stockholders’ |
|
|||||||||||
|
|
Shares |
|
|
Cost |
|
|
Capital |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
||||||||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||||
Cash dividends paid on Common stock, |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Cash dividends declared to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|||||
Issuance of stock under equity compensation plans |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid on Common stock, |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Cash dividends declared to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||||||
Issuance of stock under equity compensation plans |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The accompanying notes are an integral part of these consolidated financial statements.
9
CABOT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
UNAUDITED
A. Basis of Presentation
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) (“GAAP”) and include the accounts of Cabot Corporation (“Cabot” or the “Company”) and its wholly-owned subsidiaries and majority-owned and controlled U.S. and non-U.S. subsidiaries. Additionally, Cabot considers consolidation of entities over which control is achieved through means other than voting rights. Intercompany transactions have been eliminated in consolidation.
The consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required by Form 10-K. Additional information may be obtained by referring to Cabot’s Annual Report on Form 10-K for its fiscal year ended September 30, 2025 (the “2025 10-K”).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The financial information submitted herewith is unaudited and reflects all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods ended March 31, 2026 and 2025. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of the results expected for the fiscal year.
B. Significant Accounting Policies
Full details on the Company’s significant accounting policies may be obtained by referring to Note A in the 2025 10-K.
Recently Adopted Accounting Standards:
In December 2023, the FASB issued a new standard, Improvements to Income Tax Disclosures. The new guidance requires, on an annual basis, additional disaggregation in the rate reconciliation, disclosure of income (loss) from continuing operations before income taxes, and disclosure of income tax expense and cash taxes paid by jurisdiction (federal, state, and foreign). The Company adopted the new standard on October 1, 2025 and will provide the disclosures required by the standard in the fiscal 2026 Form 10-K. The adoption of the standard is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In November 2023, the FASB issued a new standard, Improvement to Reportable Segment Disclosures. The new guidance enhances the disclosure of significant reportable segment expenses. The Company adopted the standard for the fiscal year ended September 30, 2025 and for interim reporting periods beginning with the quarter ended December 31, 2025. See Note L for disclosures related to the Company's reportable segments. The adoption of the standard did not have a material impact on the Company’s Consolidated Financial Statements.
Recent Tax Legislation
On July 4, 2025, the U.S. federal government enacted the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains significant changes to federal tax law, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The provisions in the legislation are generally effective for the Company beginning in fiscal year 2026. The impact of these changes was not material to the Company’s Consolidated Financial Statements for its interim period ending March 31, 2026.
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued a new standard, Expense Disaggregation Disclosures. The new guidance requires quantitative and qualitative disclosure of certain cost and expense categories in the notes to the financial statements for interim and annual reporting periods. The new standard is effective for the Company's fiscal 2028 annual and interim reporting periods, with early adoption permitted. The Company is currently evaluating the timing of adoption and the impact of the adoption of this standard on the Company’s Consolidated Financial Statements.
In December 2025, the FASB issued amendments to the interim reporting guidance: Interim Reporting — Narrow-Scope Improvements. The guidance improves the navigability of the required interim disclosures and clarifies when that guidance is applicable. The guidance is effective for the Company's interim reporting periods beginning on October 1, 2028. The amendments
10
can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the adoption of this amendment on the Company’s Consolidated Financial Statements.
In September 2025, the FASB issued a new standard, Intangibles—Goodwill and Other—Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software, which is intended to modernize the accounting for the costs of internal use software given the evolution of software development to the incremental and iterative development method. The amendments remove all references to prescriptive and sequential development stages and require an entity to start capitalizing software costs when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended. The amendments are effective for annual and interim reporting periods beginning on October 1, 2028. Early adoption is permitted as of the beginning of an annual reporting period with the amendments to be applied using a prospective, modified retrospective, or retrospective transition approach. The Company is currently evaluating the timing of adoption and the impact of the adoption of this standard on the Company’s Consolidated Financial Statements.
In December 2025, the FASB issued a new standard, Accounting for Government Grants Received by Business Entities. The standard establishes authoritative guidance on the accounting for government grants received by business entities, including guidance for a grant related to an asset and a grant related to income. The new standard allows for a number of accounting policy elections to be made upon adoption and be applied to the subsequent grants received on a prospective basis. The new standard is effective for the Company’s annual and interim reporting period beginning on October 1, 2029. The new standard provides entities with a choice of modified prospective, modified retrospective, and retrospective adoption approach. The Company is currently evaluating the impact of the adoption of this standard on its Consolidated Financial Statements.
C. Acquisitions
Business acquisition
On
The operating results of MXCB were included in the results of the Company’s Reinforcement Materials segment beginning in the second quarter of 2026, including approximately $
The provisional estimates of the fair value of assets and liabilities acquired as of January 31, 2026 are set forth below based on the cash consideration.
|
|
(In millions) |
|
|
Fair value of asset acquired |
|
|
|
|
Cash |
|
$ |
|
|
Accounts and notes receivable |
|
|
|
|
Inventories |
|
|
|
|
Other assets |
|
|
|
|
Property, plant and equipment |
|
|
|
|
Intangible Assets |
|
|
|
|
Total assets acquired |
|
|
|
|
|
|
|
|
|
Fair value of liabilities assumed |
|
|
|
|
Accounts payable and accrued liabilities |
|
|
( |
) |
Other liabilities |
|
|
( |
) |
Total liabilities assumed |
|
|
( |
) |
|
|
|
|
|
Total identifiable net assets |
|
$ |
|
|
|
|
|
|
|
Cash consideration paid |
|
$ |
|
|
11
Asset acquisition
In October 2024, the Company completed the purchase of certain assets and licensed related technology, which the Company uses to manufacture products for its battery materials product line. The Company paid $
D. Goodwill and Intangible Assets
The carrying amount of goodwill attributable to each reportable segment and the changes in those balances during the six months ended March 31, 2026 are as follows:
|
|
Reinforcement |
|
|
Performance |
|
|
Total |
|
|||
|
|
(In millions) |
|
|||||||||
Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency impact |
|
|
— |
|
|
|
|
|
|
|
||
Balance at March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The following table provides information regarding the Company’s intangible assets:
|
|
March 31, 2026 |
|
|
September 30, 2025 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
|
|
(In millions) |
|
|||||||||||||||||||||
Intangible assets with finite lives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Developed technologies |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Trademarks |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total intangible assets(1) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Intangible assets are amortized over their estimated useful lives, which range between ten and
12
E. Accumulated Other Comprehensive Income (Loss) (“AOCI”)
Comprehensive income combines net income (loss) and other comprehensive income items, which are reported as components of stockholders’ equity in the accompanying Consolidated Balance Sheets.
Changes in each component of AOCI, net of tax, were as follows:
|
|
Currency |
|
|
Pension and Other |
|
|
Total |
|
|||
|
|
(In millions) |
|
|||||||||
Balance at September 30, 2025, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|||
Amounts reclassified from AOCI |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Less: Other comprehensive income (loss) attributable to |
|
|
|
|
|
— |
|
|
|
|
||
Balance at December 31, 2025, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Amounts reclassified from AOCI |
|
|
|
|
|
— |
|
|
|
|
||
Less: Other comprehensive income (loss) attributable to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at March 31, 2026, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Currency |
|
|
Pension and Other |
|
|
Total |
|
|||
|
|
(In millions) |
|
|||||||||
Balance at September 30, 2024, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Less: Other comprehensive income (loss) attributable to |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at December 31, 2024, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|||
Amounts reclassified from AOCI |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Other comprehensive income (loss) attributable to |
|
|
|
|
|
— |
|
|
|
|
||
Balance at March 31, 2025, attributable to Cabot Corporation |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The amounts reclassified out of AOCI and into the Consolidated Statements of Operations in each of the three and six months ended March 31, 2026 and 2025 are as follows:
|
|
Affected Line Item in the Consolidated |
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
Statements of Operations |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|||||||
Derivatives: net investment hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Gains) losses reclassified to interest |
|
Interest expense |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(Gains) losses excluded from effectiveness testing and amortized to interest expense |
|
Interest expense |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Pension and other postretirement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of actuarial losses and prior service cost (credit) |
|
Other income (expense) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total before tax |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
13
F. Contingencies
Respirator Liabilities
Cabot has exposure in connection with a safety respiratory products business that a subsidiary acquired from American Optical Corporation (“AO”) in an April 1990 asset purchase transaction. The subsidiary manufactured respirators under the AO brand and disposed of that business in July 1995. In connection with its acquisition of the business, the subsidiary agreed, in certain circumstances, to assume a portion of AO’s liabilities, including costs of legal fees together with amounts paid in settlements and judgments, allocable to AO respiratory products used prior to the 1990 purchase by the Cabot subsidiary. In exchange for the subsidiary’s assumption of certain of AO’s respirator liabilities, AO agreed to provide to the subsidiary the benefits of: (i) AO’s insurance coverage for the period prior to the 1990 acquisition and (ii) a former owner’s indemnity of AO holding it harmless from any liability allocable to AO respiratory products used prior to May 1982. As more fully described in the 2025 10-K, the respirator liabilities generally involve claims for personal injury, including asbestosis, silicosis and coal worker’s pneumoconiosis, allegedly resulting from the use of respirators that are alleged to have been negligently designed and/or labeled. At no time did this respiratory product line represent a significant portion of the respirator market. In addition to Cabot’s subsidiary, other parties are responsible for significant portions of the costs of these respirator liabilities (as defined in the 2025 10-K, the “Payor Group”), leaving Cabot’s subsidiary with a portion of the liability in only some of the pending cases.
As of March 31, 2026 and September 30, 2025, the Company had $
The Company’s current estimate of the cost of its share of pending and future respirator liability claims is based on facts and circumstances existing at this time, including the number and nature of the remaining claims. Developments that could affect the Company’s estimate include, but are not limited to, (i) significant changes in the number of future claims, (ii) changes in the rate of dismissals without payment of pending claims, (iii) significant changes in the average cost of resolving claims, including potential settlements of groups of claims, (iv) significant changes in the legal costs of defending these claims, (v) changes in the nature of claims received or changes in the Company’s assessment of the viability of these claims, (vi) trial and appellate outcomes, (vii) changes in the law and procedure applicable to these claims, (viii) the financial viability of the parties that contribute to the payment of respirator claims, (ix) exhaustion or changes in the recoverability of the insurance coverage maintained by certain members of the Payor Group, or a change in the availability of the indemnity provided by a former owner of AO, (x) changes in the allocation of costs among the various parties paying legal and settlement costs, and (xi) a determination that the assumptions that were used to estimate Cabot’s share of liability are no longer reasonable. The Company cannot determine the impact of these potential developments on its current estimate of its share of liability for existing and future claims. Because reserves are limited to amounts that are probable and estimable as of a relevant measurement date, and there is inherent difficulty in projecting the impact of potential developments on Cabot’s share of liability for these existing and future claims, it is reasonably possible that the liabilities for existing and future claims could change in the near term and that change could be material.
Other Matters
The Company has various other lawsuits, claims, and contingent liabilities arising in the ordinary course of its business and with respect to its divested businesses. The Company does not believe that any of these matters will have a material adverse effect on its financial position; however, litigation is inherently unpredictable. Cabot could incur judgments, enter into settlements, or revise its expectations regarding the outcome of certain matters, and such developments could have a material impact on its results of operations in the period in which the amounts are accrued or its cash flows in the period in which the amounts are paid.
G. Income Tax
Effective Tax Rate
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(Dollars in millions) |
|
|||||||||||||
(Provision) benefit for income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
For the three and six months ended March 31, 2026, the provision for income taxes included a net discrete tax expense of $
Income tax in Interim Periods
14
The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. The income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period. Losses from jurisdictions for which no benefit can be recognized are excluded from the overall computations of the estimated annual effective tax rate and a separate estimated annual effective tax rate is computed and applied to ordinary income or loss in the loss jurisdiction.
Valuation allowances are provided against the future tax benefits that arise from the deferred tax assets in jurisdictions for which the Company expects that no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by non-deductible expenses and the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.
Uncertainties
Cabot and certain subsidiaries are under audit in a number of jurisdictions. In addition, certain statutes of limitations are scheduled to expire in the near future. It is reasonably possible that a change in the unrecognized tax benefits may also occur within the next twelve months related to the settlement of one or more of these audits or the lapse of applicable statutes of limitations. However, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.
Cabot files U.S. federal and state and non-U.S. income tax returns in jurisdictions with varying statutes of limitations. The 2022 through 2024 tax years generally remain subject to examination by the IRS and various tax years from 2019 through 2024 remain subject to examination by the respective state tax authorities. In foreign jurisdictions, various tax years from 2006 through 2025 remain subject to examination by their respective tax authorities.
H. Earnings Per Share
The following tables summarize the components of the basic and diluted earnings (loss) per common share (“EPS”) computations:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions, except per share amounts) |
|
|||||||||||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Cabot Corporation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Dividends and dividend equivalents to participating securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Less: Undistributed earnings allocated to participating securities(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) allocated to common stockholders (numerator) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares and participating securities outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Participating securities(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted weighted average common shares (denominator) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) per common share - basic: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) allocated to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Plus: Earnings allocated to participating securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Adjusted earnings allocated to participating securities(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) allocated to common stockholders (numerator) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common shares issuable(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted weighted average common shares (denominator) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) per common share - diluted: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common shares and participating securities. Undistributed earnings are allocated to common stockholders and participating security holders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Calculation of undistributed earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Cabot Corporation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Dividends declared on common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Dividends declared on participating securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Undistributed earnings (loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allocation of undistributed earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Undistributed earnings (loss) allocated to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Undistributed earnings allocated to participating security holders |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Undistributed earnings (loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
I. Restructuring
2026 Restructuring
During the first quarter of fiscal 2026, the Company initiated restructuring activities in its Performance Chemicals segment ("2026 PC Plan") primarily associated with the fumed metal oxide product line. As part of the plan, the Company intends to cease production of fumed silica at its manufacturing plant in Barry, Wales in the third quarter of fiscal 2026. Cabot will continue operations to post-treat fumed silica at the site. During the three and six months ended March 31, 2026, the Company recorded charges of $
During the second quarter of fiscal 2026, the Reinforcement Materials segment, along with associated support functions, reorganized to better align resources with business needs. The Company recorded $
16
2025 Reorganizations
In fiscal 2025, the Company undertook various actions to enable the more efficient operation of the Company and reduce ongoing operational costs. These restructuring actions have resulted in reductions in workforce across business and functional teams. Cumulative expense recorded under the 2025 Reorganizations was $
Details of all restructuring activities and related reserves during the three and six months ended March 31, 2026 were as follows:
|
|
Severance |
|
|
Non-Cash Asset Impairment and Accelerated Depreciation |
|
|
Other |
|
|
Total |
|
||||
|
|
(In millions) |
|
|||||||||||||
Reserve at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Charges |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Cost charged against assets |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cash paid |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Reserve at December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Charges |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Cost charged against assets |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cash paid |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Reserve at March 31, 2026 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Cabot’s severance and employee benefits reserves are reflected in Accounts payable and accrued liabilities on the Company’s Consolidated Balance Sheets.
Cabot’s restructuring expense was recorded in the Consolidated Statement of Operations for the three and six months ended March 31, 2026 and 2025 as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Cost of sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling and administrative expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Research and technical expenses |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restructuring expense is considered a Certain item, which is further discussed in Note L.
J. Financial Instruments and Fair Value Measurements
The FASB authoritative guidance on fair value measurements defines fair value, provides a framework for measuring fair value, and requires certain disclosures about fair value measurements. The required disclosures focus on the inputs used to measure fair value. The guidance establishes the following hierarchy for categorizing these inputs:
Level 1 |
|
— |
|
Quoted market prices in active markets for identical assets or liabilities |
|
|
|
|
|
Level 2 |
|
— |
|
Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs) |
|
|
|
|
|
Level 3 |
|
— |
|
Significant unobservable inputs |
There were
17
At March 31, 2026 and September 30, 2025, the fair values of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued liabilities, and short-term borrowings and short-term variable rate debt approximated their carrying values due to the short-term nature of these instruments. Cash and cash equivalents are classified as Level 1 within the fair value hierarchy.
At March 31, 2026 and September 30, 2025, Cabot had derivatives relating to foreign currency risks, including a net investment hedge and forward foreign currency contracts, carried at fair value. At March 31, 2026, the fair value of the net investment hedge was a net liability of $
At both March 31, 2026 and September 30, 2025, the fair value of guaranteed investment contracts included in Other assets on the Consolidated Balance Sheets was $
The carrying value of the long-term fixed rate debt was $
K. Supplier Financing Programs
The Company maintains supply chain finance agreements with third-party financial institutions. These agreements allow the Company’s participating suppliers to sell their receivables to such third-party financial institutions to receive payment earlier than the negotiated commercial terms between the supplier and the Company. Such sales are at the sole discretion of the supplier, and on terms and conditions that are negotiated between the supplier and the respective financial institution. The terms and conditions of the supplier invoice, including payment terms and amounts due, are not impacted by a supplier’s participation in the program. Pursuant to the supply chain finance agreements, the Company has agreed to pay financial institutions on the original due date of the applicable invoice. There are no guarantees associated with these programs. The Company's outstanding payment obligations to financial institutions related to supplier financing programs were $
L. Financial Information by Segment
Segment Information
The Company identifies a product line as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Cabot’s President and Chief Executive Officer, to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information.
Operating segments are aggregated into a reportable segment if the operating segments are determined to have similar economic characteristics and if the operating segments are similar in the following areas: i) nature of products and services; ii) nature of production processes; iii) type or class of customer for their products and services; iv) methods used to distribute the products or provide services; and v) if applicable, the nature of the regulatory environment. The Company has
18
Details of Segment EBIT including segment revenue and significant segment expenses regularly reviewed by the CODM are as follows:
|
|
Reinforcement |
|
|
Performance |
|
|
Segment |
|
|||
|
|
(In millions) |
|
|||||||||
Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Segment cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment operating expenses(1)(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Segment Items(3) |
|
|
|
|
|
|
|
|
|
|||
Segment EBIT |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Reinforcement |
|
|
Performance |
|
|
Segment |
|
|||
|
|
(In millions) |
|
|||||||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Segment cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment operating expenses(1)(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Segment Items(3) |
|
|
|
|
|
|
|
|
|
|||
Segment EBIT |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Reinforcement |
|
|
Performance |
|
|
Segment |
|
|||
|
|
(In millions) |
|
|||||||||
Six Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Segment cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment operating expenses(1)(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Segment Items(3) |
|
|
|
|
|
|
|
|
|
|||
Segment EBIT |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Reinforcement |
|
|
Performance |
|
|
Segment |
|
|||
|
|
(In millions) |
|
|||||||||
Six Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Segment cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment operating expenses(1)(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Segment Items(3) |
|
|
|
|
|
|
|
|
|
|||
Segment EBIT |
|
$ |
|
|
$ |
|
|
$ |
|
|||
19
Reconciliation of Segment earnings before interest and income taxes to Income (loss) from operations before income taxes and equity in earnings of affiliated companies is as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Segment EBIT |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest Expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Certain items (1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unallocated corporate costs (2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
General unallocated income (expense) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Equity in earnings of affiliated companies, net of tax(4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations before income taxes and |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Details of certain items for the three and six months ended March 31, 2026 and 2025 are as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|
(In millions) |
|
||||||||||
Global restructuring activities (Note I) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Acquisition and integration-related charges (Note C) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Legal and environmental matters and reserves |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other certain items |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Total certain items |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Financial information by reportable segment is as follows:
|
|
Reinforcement |
|
|
Performance |
|
|
Segment |
|
|
Unallocated |
|
|
Consolidated |
|
|||||
|
|
(In millions) |
|
|||||||||||||||||
Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues from external customers(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues from external customers(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues from external customers(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues from external customers(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
20
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Shipping and handling fees |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Geographic Information
The Company’s segments operate globally. In addition to presenting Revenue from external customers by reportable segment, the following tables further disaggregate Revenues from external customers by geographic region.
|
|
Three Months Ended March 31, 2026 |
|
|||||||||
|
|
Reinforcement |
|
|
Performance |
|
|
Consolidated Total |
|
|||
|
|
(In millions) |
|
|||||||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|||
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
|
|
|
|
|
|
|
|
|||
Unallocated and other |
|
|
|
|
|
|
|
|
|
|||
Net sales and other operating revenues |
|
|
|
|
|
|
|
$ |
|
|||
|
|
Three Months Ended March 31, 2025 |
|
|||||||||
|
|
Reinforcement |
|
|
Performance |
|
|
Consolidated Total |
|
|||
|
|
(In millions) |
|
|||||||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|||
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
|
|
|
|
|
|
|
|
|||
Unallocated and other |
|
|
|
|
|
|
|
|
|
|||
Net sales and other operating revenues |
|
|
|
|
|
|
|
$ |
|
|||
|
|
Six Months Ended March 31, 2026 |
|
|||||||||
|
|
Reinforcement |
|
|
Performance |
|
|
Consolidated Total |
|
|||
|
|
(In millions) |
|
|||||||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|||
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
|
|
|
|
|
|
|
|
|||
Unallocated and other |
|
|
|
|
|
|
|
|
|
|||
Net sales and other operating revenues |
|
|
|
|
|
|
|
$ |
|
|||
|
|
Six Months Ended March 31, 2025 |
|
|||||||||
|
|
Reinforcement |
|
|
Performance |
|
|
Consolidated Total |
|
|||
|
|
(In millions) |
|
|||||||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|||
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||
Segment revenues from external customers |
|
|
|
|
|
|
|
|
|
|||
Unallocated and other |
|
|
|
|
|
|
|
|
|
|||
Net sales and other operating revenues |
|
|
|
|
|
|
|
$ |
|
|||
21
M. Subsequent Events
On May 1, 2026, the Company committed to a restructuring plan to better align its carbon black production to current demand conditions. Under this restructuring plan, the Company: (i) expects to cease all operations at its plant in Campana, Argentina by the end of calendar year 2026; and (ii) subject to local works council consultations, intends to close multiple manufacturing units at its plant in Botlek, The Netherlands over the course of fiscal 2026 and 2027.
The Company expects this restructuring will result in pre-tax charges to earnings of approximately $
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Recently Issued Accounting Pronouncements
Refer to the discussion under the heading “Recent Accounting Pronouncements” in Note B of our Notes to the unaudited Consolidated Financial Statements.
Results of Operations
The Company has two reportable segments: Reinforcement Materials and Performance Chemicals. The Performance Chemicals reporting segment aggregates the specialty carbons, specialty compounds, fumed metal oxides, battery materials, inkjet colorants and aerogel product lines.
Our measure of business segment earnings is Segment earnings before interest and taxes (“Segment EBIT”) and is the measure utilized by the Chief Operating Decision Maker (“CODM”) to allocate resources and to assess operating results and financial performance. The CODM reviews the change in the actual results compared to the same period forecast, the same period year-ago, and the preceding period on a quarterly basis. Segment EBIT includes all items that are controlled by the business segment and those management considers are representative of the fundamental on-going segment results.
The Company is also organized for operational purposes into three geographic regions: the Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific. The discussion of our results of operations for the periods presented reflects these structures.
Definition of Terms
When discussing our results of operations, we use the term “product mix”, which refers to the mix of types and grades 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 and/or segment.
Overview
During the second quarter of fiscal 2026, Income (loss) before income taxes and equity in earnings of affiliated companies decreased as compared to the second quarter of fiscal 2025. The decrease was primarily due to lower segment EBIT in our Reinforcement Materials segment, partially offset by higher segment EBIT in our Performance Chemicals segment.
Second quarter of Fiscal 2026 versus Second quarter of Fiscal 2025—Consolidated
Net Sales and Other Operating Revenues and Gross Profit
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Net sales and other operating revenues |
|
$ |
904 |
|
|
$ |
936 |
|
|
$ |
1,753 |
|
|
$ |
1,891 |
|
Gross profit |
|
$ |
210 |
|
|
$ |
241 |
|
|
$ |
421 |
|
|
$ |
476 |
|
For the three and six months ended March 31, 2026, Net sales and other operating revenue decreased by $32 million and $138 million, respectively, compared to the same periods of fiscal 2025.
The decrease in Net sales and other operating revenue in the second quarter of fiscal 2026 compared to the same period of fiscal 2025 was driven by less favorable pricing and product mix in our Reinforcement Materials segment ($95 million), partially offset by the favorable impact from foreign currency translation in both our Reinforcement Materials and Performance Chemicals segments ($43 million combined) and higher volumes in our Reinforcement Materials segment ($21 million). The less favorable pricing and product mix in our Reinforcement Materials segment was driven by lower raw material costs which are generally passed through to our customers, less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes in our Reinforcement Materials segment were primarily due to higher demand in Asia Pacific and EMEA and increased sales volume from our acquisition of MXCB that closed in the second quarter of fiscal 2026.
The decrease in Net sales and other operating revenue in the first six months of fiscal 2026 compared to the same period of fiscal 2025 was primarily driven by less favorable pricing and product mix ($162 million combined), primarily in our Reinforcement Materials segment, and lower volumes ($30 million combined), primarily in our Reinforcement Material segment, partially offset by the favorable impact from foreign currency translation in both our Reinforcement Materials and Performance Chemicals segments ($58 million combined). The less favorable pricing and product mix in our Reinforcement Materials segment was driven by lower raw material costs which are generally passed through to our customers, less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The lower volumes in our Reinforcement Materials segment were primarily due to lower volumes in the Americas and Asia Pacific. Volumes were impacted by lower production levels at our tire customers and year-end inventory management in our first fiscal quarter by our customers in the Americas and increased competitive intensity in Asia Pacific.
23
For the three and six months ended March 31, 2026, gross profit decreased by $31 million and $55 million, respectively, compared to the same periods of fiscal 2025.
The decrease in Gross profit in the second quarter of fiscal 2026 as compared to the same period of fiscal 2025 was driven primarily by lower gross profit per ton in our Reinforcement Materials segment ($53 million), partially offset by higher volumes in both our Reinforcement Materials and Performance Chemicals segments ($13 million combined) and higher gross profit per ton in our Performance Chemicals segment ($5 million). The lower gross profit per ton in our Reinforcement Materials segment was primarily driven by less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes in our Reinforcement Materials segment were primarily driven by higher demand in Asia Pacific and EMEA and increased sales volume from our acquisition of MXCB that closed in the second quarter of fiscal 2026. The higher volumes in our Performance Chemicals segment were primarily driven by higher volumes in our battery materials and specialty carbons product lines from higher demand. The higher gross profit per ton in our Performance Chemicals segment was primarily due to a more favorable product mix and optimization efforts.
The decrease in Gross profit in the first six months of fiscal 2026 as compared to the same period of fiscal 2025 was driven primarily by lower gross profit per ton in our Reinforcement Materials segment ($65 million) and lower volumes in both our Reinforcement Materials and Performance Chemicals segments ($13 million combined), partially offset by higher gross profit per ton in our Performance Chemicals segment ($16 million). The lower gross profit per ton in our Reinforcement Materials segment was primarily driven by less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The lower volumes in our Reinforcement Materials segment were primarily due to lower volumes in the Americas and Asia Pacific. Volumes in our Reinforcement Materials segment were impacted by lower production levels at our tire customers and year-end inventory management in our first fiscal quarter by our customers in the Americas and increased competitive intensity in Asia Pacific. The lower volumes in our Performance Chemicals segment were primarily due to weaker demand in Europe. The higher gross profit per ton in our Performance Chemicals segment was primarily driven by a favorable product mix and from lower spending from overall cost management efforts and optimization measures across the segment.
Selling and Administrative Expenses
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Selling and administrative expenses |
|
$ |
67 |
|
|
$ |
64 |
|
|
$ |
136 |
|
|
$ |
130 |
|
Selling and administrative expenses increased by $3 million and $6 million, respectively, for the three and six months ended March 31, 2026, compared to the same periods of fiscal 2025. The higher selling and administrative expenses for the three months ended March 31, 2026 compared to the same period of fiscal 2025 was primarily due to an increase in the valuation of deferred compensation expense and the higher selling and administrative expenses in the six months ended March 31, 2026 compared to the same period of fiscal 2025 was primarily due to higher legal expenses.
Research and Technical Expenses
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Research and technical expenses |
|
$ |
14 |
|
|
$ |
15 |
|
|
$ |
27 |
|
|
$ |
29 |
|
Research and technical expenses decreased by $1 million and $2 million, respectively, for the three and six months ended March 31, 2026 compared to the same periods of fiscal 2025 primarily due to cost management efforts.
Interest and Dividend Income, Interest Expense and Other Income (Expense)
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Interest and dividend income |
|
$ |
7 |
|
|
$ |
7 |
|
|
$ |
14 |
|
|
$ |
13 |
|
Interest expense |
|
$ |
(18 |
) |
|
$ |
(19 |
) |
|
$ |
(36 |
) |
|
$ |
(37 |
) |
Other income (expense) |
|
$ |
2 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
2 |
|
Interest and dividend income was unchanged and increased by $1 million, respectively, for the three and six months ended March 31, 2026 compared to the same periods of fiscal 2025. The $1 million increase was primarily due to higher average cash balances, partially offset by lower average interest rates.
24
Interest expense decreased by $1 million for both the three and six months ended March 31, 2026 compared to the same periods of fiscal 2025 primarily due to lower average interest rates on short-term borrowings.
Other income (expense) improved by $1 million in the second quarter of fiscal 2026 compared to the same period of fiscal 2025, primarily due to foreign exchange gains in Argentina and Colombia. Other income (expense) was unchanged for the six months ended March 31, 2026, as compared to the same period of fiscal 2025.
(Provision) Benefit for Income Taxes and Effective Tax Rate
|
|
Three Months Ended March 31 |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
(Provision) / Benefit for Income Taxes |
|
|
Rate |
|
|
(Provision) / Benefit for Income Taxes |
|
|
Rate |
|
||||
Dollars in millions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective tax rate |
|
$ |
(44 |
) |
|
|
37 |
% |
|
$ |
(49 |
) |
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six Months Ended March 31 |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
(Provision) / Benefit for Income Taxes |
|
|
Rate |
|
|
(Provision) / Benefit for Income Taxes |
|
|
Rate |
|
||||
Dollars in millions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective tax rate |
|
$ |
(81 |
) |
|
|
34 |
% |
|
$ |
(90 |
) |
|
|
30 |
% |
For the second quarter of fiscal 2026, the (Provision) benefit for income taxes was a provision of $44 million compared to a provision of $49 million for the same period in fiscal 2025, with the change primarily due to lower earnings and change in the mix of earnings. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate, and by the presence of valuation allowances in certain tax jurisdictions.
For the six months ended March 31, 2026, the (Provision) benefit for income taxes was a provision of $81 million compared to a provision of $90 million for the same period in fiscal 2025, with the change primarily due to lower earnings and change in the mix of earnings. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate, and by the presence of valuation allowances in certain tax jurisdictions.
Equity in Earnings of Affiliated Companies and Net Income (Loss) Attributable to Noncontrolling Interests
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Equity in earnings of affiliated companies, |
|
$ |
2 |
|
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
4 |
|
Net income (loss) attributable to |
|
$ |
10 |
|
|
$ |
11 |
|
|
$ |
19 |
|
|
$ |
22 |
|
Equity in earnings of affiliated companies, net of tax, decreased by $1 million for both the three and six months ended March 31, 2026 compared to the same periods of fiscal 2025, primarily due to lower profitability of our equity affiliate in Venezuela.
Net income (loss) attributable to noncontrolling interests, net of tax, decreased by $1 million and $3 million, respectively for the three and six months ended March 31, 2026 compared to the same periods of fiscal 2025 primarily due to lower profitability of our joint venture in the Czech Republic.
Net Income Attributable to Cabot Corporation
In the second quarter of fiscal 2026 and 2025, we reported Net income (loss) attributable to Cabot Corporation of $68 million ($1.27 per diluted common share) and $94 million ($1.69 per diluted common share), respectively. The lower Net income in the second quarter of fiscal 2026 compared with the same period in fiscal 2025 was primarily due to lower EBIT in our Reinforcement Materials segment ($38 million), partially offset by higher EBIT in our Performance Chemicals segment ($9 million).
25
In the first six months of fiscal 2026 and 2025, we reported Net income (loss) attributable to Cabot Corporation of $141 million ($2.64 per diluted common share) and $187 million ($3.36 per diluted common share), respectively. The lower Net income in the first six months of fiscal 2026 compared with the same period in fiscal 2025 was primarily due to lower EBIT in our Reinforcement Materials segment ($66 million), partially offset by higher EBIT in our Performance Chemicals segment ($12 million).
Second quarter of Fiscal 2026 versus Second quarter of Fiscal 2025—By Business Segment
Reinforcement Materials
Sales and EBIT for Reinforcement Materials for the second quarter of fiscal 2026 and 2025 were as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Reinforcement Materials Sales |
|
$ |
544 |
|
|
$ |
594 |
|
|
$ |
1,064 |
|
|
$ |
1,205 |
|
Reinforcement Materials EBIT |
|
$ |
93 |
|
|
$ |
131 |
|
|
$ |
195 |
|
|
$ |
261 |
|
Sales in Reinforcement Materials decreased by $50 million in the second quarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to less favorable pricing and product mix ($95 million), partially offset by higher volumes ($21 million) and the favorable impact from foreign currency translation ($28 million). The less favorable pricing and product mix was driven by lower raw material costs which are generally passed through to our customers, less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes were primarily due to higher demand in Asia Pacific and EMEA and increased sales volume from our acquisition of MXCB that closed in the second quarter of fiscal 2026.
Sales in Reinforcement Materials decreased by $141 million in the first six months of fiscal 2026 compared to the same period of fiscal 2025 primarily due to less favorable pricing and product mix ($157 million) and lower volumes ($22 million), partially offset by the favorable impact from foreign currency translation ($38 million). The less favorable pricing and product mix was driven by lower raw material costs which are generally passed through to our customers, less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The lower volumes were primarily due to lower volumes in the Americas and Asia Pacific. Volumes were impacted by lower production levels at our tire customers and year-end inventory management in the first fiscal quarter by our customers in the Americas and increased competitive intensity in Asia Pacific.
EBIT in Reinforcement Materials in the second quarter of fiscal 2026 decreased by $38 million compared to the same period of fiscal 2025. The decrease in EBIT was primarily driven by lower gross profit per ton ($53 million), partially offset by higher volumes ($9 million). The lower gross profit per ton was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes were primarily due to higher demand in Asia Pacific and EMEA and increased sales volume from our acquisition of MXCB that closed in the second quarter of fiscal 2026.
EBIT in Reinforcement Materials decreased by $66 million in the first six months of fiscal 2026 compared to the same period of fiscal 2025. The decrease in EBIT was primarily driven by lower gross profit per ton ($65 million) and lower volumes ($8 million), partially offset by the favorable impact of foreign currency translation ($6 million). The lower gross profit per ton was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The lower volumes were primarily due to lower volumes in the Americas and Asia. Volumes were impacted by lower production levels at our tire customers and year-end inventory management in the first fiscal quarter by our customers in the Americas and increased competitive intensity in Asia Pacific.
As we look to the third quarter of the fiscal year, we expect Reinforcement Materials segment EBIT to improve sequentially from the second quarter of fiscal 2026 primarily due to higher gross profit per ton from a more favorable product mix and yield improvements and a full fiscal quarter of operations from our acquisition of MXCB that closed in the second quarter of fiscal 2026.
Performance Chemicals
Sales and EBIT for Performance Chemicals for the second quarter of fiscal 2026 and 2025 were as follows:
|
|
Three Months Ended March 31 |
|
|
Six Months Ended March 31 |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Performance Chemicals Sales |
|
$ |
328 |
|
|
$ |
311 |
|
|
$ |
628 |
|
|
$ |
622 |
|
Performance Chemicals EBIT |
|
$ |
59 |
|
|
$ |
50 |
|
|
$ |
107 |
|
|
$ |
95 |
|
26
Sales in Performance Chemicals increased by $17 million in the second quarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to the favorable impact from foreign currency translation ($15 million) and higher volumes.
Sales in Performance Chemicals increased by $6 million in the first six months of fiscal 2026 compared to the same period of fiscal 2025 primarily due to the favorable impact from foreign currency translation ($20 million), partially offset by lower volumes ($8 million) and less favorable pricing and product mix ($5 million). The lower volumes were primarily due to lower volumes in our fumed metal oxides product line from lower demand and the less favorable pricing and product mix was primarily due to lower raw material costs which, in certain instances, are passed through to our customers through formulas and other market-based adjustments.
EBIT in Performance Chemicals increased by $9 million in the second quarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to higher gross profit per ton ($5 million) and from higher volumes ($4 million). The higher gross profit per ton was primarily driven by a more favorable product mix and optimization efforts. The higher volumes were primarily due to higher volumes in our battery materials and specialty carbons product lines from higher demand.
EBIT in Performance Chemicals increased by $12 million in the first six months of fiscal 2026 compared to the same period of fiscal 2025 primarily due to a higher gross profit per ton ($16 million), partially offset by lower volumes ($5 million). The higher gross profit per ton was primarily driven by a more favorable product mix and from lower spending from overall cost management efforts and optimization measures across the segment. The lower volumes in our Performance Chemicals segment were primarily due to weaker demand in Europe.
As we look to the third quarter of the fiscal year, we expect the Performance Chemicals segment EBIT to be relatively flat sequentially from the second quarter of fiscal 2026 on stable sequential volumes and flat sequential gross profit per ton.
Liquidity and Capital Resources
Overview
Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, decreased by $153 million during the first six months of fiscal 2026, largely reflecting a higher commercial paper balance at March 31, 2026 due in part from our funding of our acquisition of MXCB. As of March 31, 2026, we had cash and cash equivalents of $252 million and borrowing availability under our revolving credit agreements of $1.1 billion.
We have access to borrowings under the following two credit agreements:
As of March 31, 2026, we were in compliance with the debt covenants under the Credit Agreements, which, with limited exceptions, require us to comply on a quarterly basis with a leverage test requiring the ratio of consolidated net debt to consolidated EBITDA not to exceed 3.50 to 1.00. Consolidated net debt is defined as consolidated debt offset by the lesser of (i) unrestricted cash and cash equivalents and (ii) $150 million.
A significant portion of our business occurs outside the U.S. and our cash generation does not always align geographically with our cash needs. The vast majority of our cash and cash equivalent holdings tend to be held outside the U.S. We generally use a combination of U.S. earnings, repatriation of certain foreign earnings, commercial paper issuances and borrowings under our U.S. Credit Agreement to meet our U.S. cash needs. With the exception of Argentina, which has some currency controls that prevent the distribution of cash, we are generally able to move cash throughout the Company through our cash pooling structures, intercompany accounts and/or distributions, as needed. Although we repatriate certain foreign earnings, cash held by foreign subsidiaries is generally considered permanently reinvested and is used to finance the subsidiaries’ operational activities and future investments. We usually reduce our commercial paper balance and, if applicable, borrowings under our Credit Agreements, at quarter-end using cash derived from customer collections, including the utilization of customer supply chain financing programs, settlement of intercompany balances and short-term intercompany loans. If additional funds are needed in the U.S., we expect to be able to repatriate cash, including cash from China, while paying any withholding or other taxes. Changes in regulations and tax laws in the U.S. or foreign countries could restrict our ability to transfer funds or impose material costs on such transfers.
27
As of March 31, 2026 and September 30, 2025, we had $126 million and $130 million, respectively, of borrowings under the Euro Credit Agreement and no outstanding borrowings under the U.S. Credit Agreement at either date. There was $148 million and $6 of commercial paper outstanding as of March 31, 2026 and September 30, 2025, respectively.
We anticipate sufficient liquidity from (i) cash on hand; (ii) cash flows from operating activities; and (iii) cash available from the Credit Agreements and our commercial paper program to meet our operational and capital investment needs and financial obligations for both the next twelve months and the foreseeable future. The liquidity we derive from cash flows from operations is, to a large degree, predicated on our ability to collect our receivables in a timely manner, the cost of our raw materials, and our ability to manage inventory levels.
The following discussion of the changes in our cash balance refers to the various sections of our Consolidated Statements of Cash Flows.
Cash Flows from Operating Activities
Cash provided by operating activities, which consists of net income adjusted for the various non-cash items included in income, changes in working capital and changes in certain other balance sheet accounts, totaled $203 million in the first six months of fiscal 2026 compared to $197 million of cash provided by operating activities during the same period of fiscal 2025.
Cash provided by operating activities in the first six months of fiscal 2026 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $90 million and an increase in net working capital of $14 million. The increase in net working capital was largely driven by a decrease in Accounts payable and accrued liabilities, which was partially offset by a decrease in Accounts and notes receivable.
Cash provided by operating activities in the first six months of fiscal 2025 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $75 million and cash dividends received from one of our equity investments of $12 million, which was offset by an increase in net working capital of $114 million. The increase in net working capital was largely driven by a decrease in Accounts Payable and accrued liabilities, and an increase in Accounts and notes receivable.
Cash Flows from Investing Activities
Investing activities consumed $178 million of cash in the first six months of fiscal 2026 compared to $174 million of cash consumed during the same period of fiscal 2025.
In the first six months of fiscal 2026 and 2025, investing activities included $114 million and $149 million, respectively, of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital. In addition, in the second quarter of fiscal 2026, investing activities included $66 million of cash paid, net of cash acquired, for the acquisition of MXCB and in the first quarter of fiscal 2025, investing activities included $27 million for cash paid for an asset acquisition, both of which are described in Note C of our Notes to the Consolidated Financial Statements.
Capital expenditures for fiscal 2026 are expected to be between $200 million and $230 million. Our planned capital spending program for fiscal 2026 is for sustaining, compliance and improvement capital projects at our operating facilities.
Cash Flows from Financing Activities
Financing activities consumed $39 million of cash in the first six months of fiscal 2026 compared to $7 million of cash consumed during the same period of fiscal 2025.
In the first six months of fiscal 2026, financing activities primarily consisted of repurchases of common stock of $101 million and dividend payments of $48 million and $47 million to common stockholders and noncontrolling interest, respectively. These payments were partially offset by net proceeds from the issuance of commercial paper of $142 million and net proceeds from short-term borrowing of $19 million.
In the first six months of fiscal 2025, financing activities primarily consisted of repurchases of common stock of $89 million, dividend payments of $47 million and $20 million to common stockholders and noncontrolling interest, respectively. These payments were partially offset by net proceeds from the issuance of commercial paper of $145 million.
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Forward-Looking Information
This report on Form 10-Q contains “forward-looking statements” under the Federal securities laws. These forward-looking statements address expectations or projections about the future, including our expectations regarding our future business performance and overall prospects, including for EBIT in our business segments in the third quarter of fiscal 2026, and the principal assumptions underlying these expectations, including demand for our products, the sufficiency of our cash on hand, cash provided from operations and cash available under our credit and commercial paper facilities to fund our cash requirements in both the next twelve months and the foreseeable future; anticipated capital spending; cash requirements and uses of available cash, including future cash outlays associated with respirator liabilities and reorganization activity and the timing of such outlays; amortization expenses; the amounts and timing of the charges we expect to record and the estimates of the total costs of restructuring plans and expected cash outlays in connection with reorganization activities; our operating tax rate; the cessation of production of fumed silica at our manufacturing plant in Barry, Wales beginning in the third quarter of fiscal 2026; and the possible outcome of legal and environmental proceedings. From time to time, we also provide forward-looking statements in other materials we release to the public and in oral statements made by authorized officers.
Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control or difficult to predict. If known or unknown risks materialize, our actual results could differ materially from those expressed in the forward-looking statements.
In addition to factors described elsewhere in this report, the following are some of the factors that could cause our actual results to differ materially from those expressed in our forward-looking statements: industry capacity utilization, shifts in the geographic area of tire production, and competition from other specialty chemical companies; safety, health and environmental requirements and related constraints imposed on our business; regulatory and financial risks related to climate change developments; volatility in the price and availability of energy and raw materials, including with respect to the Russian invasion of Ukraine or the conflict in the Middle East; a significant adverse change in a customer or joint venture relationship or the failure of a customer or joint venture partner to perform its obligations under agreements with us; failure to achieve growth expectations from new products, applications and technology developments; failure to realize benefits from acquisitions, alliances, or joint ventures or achieve our portfolio management objectives; in connection with our restructuring activities in Campana and The Netherlands, finalization of employee severance arrangements, finalization of the accounting impact of the closures, higher than expected demolition, site clearing, environmental remediation or asset retirement costs, and our ability to successfully consolidate production in fewer plants, and to maintain customer volumes as we consolidate production; unanticipated delays in or increased costs of site development projects; negative or uncertain worldwide or regional economic conditions and market opportunities, including from trade relations, global health matters or geo-political conflicts; litigation or legal proceedings; interest rates, tax rates, tariffs, currency exchange controls, and fluctuations in foreign currency; and the accuracy of the assumptions we used in establishing reserves for our share of liability for respirator claims. These other factors and risks are discussed more fully in our 2025 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the period ended March 31, 2026 does not differ materially from that discussed under Item 7A of our 2025 10-K.
Item 4. Controls and Procedures
As of March 31, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of that date.
There were no changes in our internal controls over financial reporting that occurred during our fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II. Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The table below sets forth information regarding Cabot’s purchases of its equity securities during the quarter ended March 31, 2026:
Period |
|
Total Number of |
|
|
Average Price |
|
|
Total Number of |
|
|
Maximum Number (or |
|
||||
January 1, 2026 - January 31, 2026 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
8,718,467 |
|
|
February 1, 2026 - February 28, 2026 |
|
|
400,000 |
|
|
$ |
75.58 |
|
|
|
400,000 |
|
|
|
8,318,467 |
|
March 1, 2026 - March 31, 2026 |
|
|
249,147 |
|
|
$ |
71.31 |
|
|
|
249,147 |
|
|
|
8,069,320 |
|
Total |
|
|
649,147 |
|
|
|
|
|
|
649,147 |
|
|
|
|
||
Item 5. Other Information
Rule 10b5-1 Trading Plans
During our fiscal quarter ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as
Costs Associated with Exit Activities at Campana, Argentina and Botlek, The Netherlands
On May 1, 2026, the board of directors of Cabot Corporation committed to a plan to better align its carbon black production to current demand conditions. Under this restructuring plan, the Company: (i) expects to cease all operations at its plant in Campana, Argentina by the end of calendar year 2026; and (ii) subject to local works council consultations, intends to close multiple manufacturing units at its plant in Botlek, The Netherlands over the course of fiscal 2026 and 2027. The Company believes these plans will allow the Company to respond to market conditions, while building a more efficient and optimized manufacturing network to meet the Company’s customer supply needs.
The Company expects this restructuring will result in pre-tax charges to earnings of approximately $79 million, with approximately $63 million of this amount expected to be recorded during fiscal year 2026 and $16 million during fiscal 2027. These charges are principally comprised of: (i) severance and post-employment benefits of $11 million, (ii) non-cash charges related to accelerated depreciation and impairment of facility assets of $45 million and $10 million, respectively, (iii) demolition, site clearing, and environmental-related costs of $7 million, and (iv) post closure operating costs of $6 million.
Future cash outlays related to these actions are expected to be $24 million, approximately $10 million of which is expected to be paid during fiscal 2026 and the balance during fiscal 2027.
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Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
Exhibit 3.1 |
|
Restated Certificate of Incorporation of Cabot Corporation effective January 9, 2009 (incorporated herein by reference to Exhibit 3.1 of Cabot’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2008, file reference 1-5667, filed with the SEC on February 9, 2009). |
|
|
|
Exhibit 3.2 |
|
The By-laws of Cabot Corporation as amended May 11, 2023 (incorporated herein by reference to Exhibit 3.1 of Cabot Corporation’s Current Report on Form 8-K, file reference 1-5667, filed with the SEC on May 15, 2023). |
|
|
|
Exhibit 31.1* |
|
Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. |
|
|
|
Exhibit 31.2* |
|
Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. |
|
|
|
Exhibit 32** |
|
Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350. |
|
|
|
Exhibit 101.INS* |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
Exhibit 101.SCH* |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document. |
|
|
|
Exhibit 104* |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL (included in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
CABOT CORPORATION |
|
|
|
|
|
Date: May 6, 2026 |
|
By: |
/s/ Erica McLaughlin |
|
|
|
Erica McLaughlin |
|
|
|
Executive Vice President and Chief Financial Officer |
|
|
|
(duly authorized officer) |
|
|
|
|
|
|
|
|
Date: May 6, 2026 |
|
By: |
/s/ Lisa m. Dumont |
|
|
|
Lisa M. Dumont |
|
|
|
Vice President, Chief Accounting Officer and Controller (chief accounting officer) |
32