Cabot Corp. (CBT) Tops Q2 EPS by 6c

Cabot Corp. (NYSE: CBT) reported Q2 EPS of $0.77, $0.06 better than the analyst estimate of $0.71. Revenue for the quarter came in at $710 million versus the consensus estimate of $766.94 million.

Outlook

Commenting on the outlook for the Company, Keohane said, “We expect lower demand due to the impact of the COVID-19 pandemic to continue, with a pronounced effect on fiscal third quarter results. At the segment level, we expect a significant reduction in demand in Reinforcement Materials in the third fiscal quarter due to temporary customer shutdowns in Europe and the Americas. In Performance Chemicals, we expect product mix in specialty carbons and compounds to be negatively impacted by a decline in underlying automotive demand in Europe and the Americas, while we anticipate the challenging price environment for fumed silica in China and Europe will continue. Additionally, we expect the Purification Solutions segment will see year-over-year declines in quarterly EBIT due to the impact of COVID-19.”

Keohane continued, “2020 is going to be a difficult year for the world and our industry, but Cabot’s financial footing is sound as we work through this uncertain environment. In the short-term, we expect falling raw material prices and an intense focus on working capital efficiency to provide strong operating cash flow generation. We are reducing further our capital spending levels for the fiscal year to approximately $200 million, have temporarily halted share repurchases, and have taken appropriate cost reduction actions to conserve cash. We finished the quarter with cash and committed loan facilities of $1.3 billion, we have no significant debt maturities until fiscal 2022, and our Debt to EBITDA ratio as of the end of March was 2.5x. As is consistent with our history of countercyclical cash generation, we expect approximately $200 million of operating cash flow in the second half of the fiscal year that we expect will more than fund our current dividend and our capital expenditures plan in the back half of the year. Given the lack of visibility into underlying demand, we are not providing fiscal year earnings per share guidance at this time. While this is certainly a challenging time, we believe our focus on cash generation and our strong balance sheet will allow us to successfully navigate this period and emerge from the downturn as an even stronger industry leader.”

For earnings history and earnings-related data on Cabot Corp. (CBT) click here.

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