Cabot released third quarter Fiscal 2019 result effected by Chinese weaken demand

Commenting on the results, Cabot President and CEO Sean Keohane said, “We delivered solid results in the third quarter with adjusted earnings per share of $1.00 despite a challenging economic environment that impacted results in the Reinforcement Materials and Performance Chemicals segments. Among the challenges we faced were a weak business environment in China and continued softness in automotive production, particularly in China and EMEA. These factors were partially offset by the favorable impact from calendar year 2019 tire customer agreements and the improved results in our Purification Solutions segment. Given the current business environment, we continued to take actions to reduce costs and have lowered our capital expenditures forecast for the year.”

Keohane continued, “Cash generation and return remain important elements of our capital allocation framework. During the quarter we generated strong cash flows from operations of $115 million and increased our dividend by 6%. We returned $52 million in the quarter through share repurchases and dividends and a total of $307 million over the last four quarters. On the strategic front, we completed the divestiture of our Specialty Fluids business with proceeds of $135 million. We also remain committed to investing for growth in our core businesses and commissioned our fumed silica plant in Wuhai, China in the third quarter of fiscal 2019.“

Financial Detail

For the third quarter of fiscal 2019, net income attributable to Cabot Corporation was $32 million ($0.55 per diluted common share). Net income includes an after-tax per share charge of ($0.45) from certain items, principally reflecting an additional tax expense from recently finalized U.S. Treasury Regulations related to U.S. tax reform enacted in 2017. Adjusted EPS for the third quarter of fiscal 2019 was $1.00 per share." 

Segment Results

Reinforcement Materials – Third quarter fiscal 2019 EBIT in Reinforcement Materials decreased by $2 million compared to the third quarter of fiscal 2018. The decrease in EBIT was principally due to lower margins in China and reduced volumes associated with weak automotive production. These impacts were partially offset by the favorable terms of our calendar year 2019 tire customer agreements. Globally, volumes decreased 2% year-over-year as indicated in the table below. Volumes improved 2% in Asia driven by China, decreased 7% in EMEA due to softer automotive production, and declined 3% in the Americas from weaker volumes in Latin America." 

Performance Chemicals -- Third quarter fiscal 2019 EBIT in Performance Chemicals decreased by $19 million compared to the third quarter of fiscal 2018 primarily due to lower volumes and a less favorable product mix. The less favorable product mix was attributed primarily to our specialty carbons product line where we saw continued weakness in automotive and fiber products. Year-over-year, volumes decreased by 2% in the Performance Additives business primarily due to the fumed metal oxides product line and decreased 2% in the Formulated Solutions business due to lower sales in our inkjet colorants product line." 

Purification Solutions – Third quarter fiscal 2019 EBIT in Purification Solutions increased by $7 million compared to the third quarter of fiscal 2018 due to higher volumes and prices in specialty applications and the benefit from lower fixed costs as a result of the transformation plan we began implementing this year." 

Specialty Fluids – Third quarter fiscal 2019 EBIT in Specialty Fluids decreased by $1 million compared to the third quarter of fiscal 2018 due to the mix of project activity."