Cabot Corp.

Cabot reported third-quarter fiscal 2026 adjusted EPS of $1.67, up 4% sequentially. Reinforcement Materials EBIT was $97 million, versus $128 million in the prior-year quarter, while EBITDA was $117 million with a 20% EBITDA margin. Performance Chemicals segment EBIT was $68 million, up 19% year over year, driven by higher volumes and higher gross profit per ton. Operating cash flow was $75 million, despite about $44 million of higher net working capital tied to rapidly rising raw material costs. The company returned $24 million to shareholders through dividends, invested $38 million in capital expenditures, ended with $250 million of cash and cash equivalents, about $1.3 billion of liquidity, and net debt-to-EBITDA of 1.4x. Full-year fiscal 2026 adjusted EPS guidance was narrowed to $6.15 to $6.45 from $6 to $6.50; the operating tax rate range was raised to 28% to 30%, and CapEx guidance was narrowed to $200 million to $215 million. Management said Battery Materials EBITDA of approximately $40 million in fiscal 2026 is reaffirmed, and new U.S. conductive additive capacity is expected to require about $125 million of investment with startup in 2028.

Sean Keohane said Cabot is operating from a position of strength and framed his retirement and Erica McLaughlin’s appointment as part of a thoughtful succession process. He emphasized that the portfolio is benefiting from disciplined execution, with strong demand tailwinds in infrastructure, electronics tied to AI, and battery materials, while the company continues to optimize assets and pursue growth investments. His tone was confident but measured, repeatedly noting that the environment remains dynamic due to geopolitics, energy volatility, and uneven demand.

Erica McLaughlin focused on balance sheet strength, liquidity, and capital discipline. She highlighted $75 million of operating cash flow, $38 million of CapEx, $24 million of dividends, $101 million of share repurchases year to date, $250 million of cash, approximately $1.3 billion of liquidity, and $1.3 billion of debt, with net debt-to-EBITDA at 1.4x. She also said Cabot expects to refinance its public bond maturing in September in the fourth quarter, updated the fiscal 2026 operating tax rate to 28% to 30%, and narrowed CapEx to $200 million to $215 million.

Analysts focused on oil-driven pricing in Specialty Carbons, the pace of battery materials growth versus industry expansion, the outlook for Reinforcement Materials amid tire import trends, and whether Performance Chemicals margins would normalize in Q4. Management said pricing in Specialty Carbons is being managed actively against volatile oil, with Q3 price action catching up to higher raw costs and Q4 margins expected to normalize. On batteries, Sean said Cabot is growing above market, capacity is being timed to customer start-ups, and the current expansion roughly supports about 3 years of growth; on Reinforcement Materials, he pointed to lower EU and North American tire imports and EU antidumping duties as directionally positive. Erica said the Q4 Performance Chemicals margin reset is mainly raw-material cost flow-through, with only minor mix effects.