On November 4, 2024, Cabot Corp (CBT, Financial) released its 8-K filing detailing the financial results for the fourth quarter and fiscal year 2024. Cabot Corp, a global specialty chemicals and performance materials company, operates through two main segments: Reinforcement Materials and Performance Chemicals. The company reported a diluted EPS of $2.43 for the fourth quarter and $6.72 for the fiscal year, with adjusted EPS of $1.80 and $7.06, respectively.
Quarterly and Annual Performance
For the fourth quarter, Cabot Corp reported net sales of $1,001 million, slightly below the analyst estimate of $1,010.62 million. The adjusted EPS of $1.80 fell short of the analyst estimate of $1.85. Despite these misses, the company achieved a 9% increase in adjusted EPS compared to the same quarter last year, benefiting from a lower operating tax rate.
Annually, Cabot Corp's adjusted EPS of $7.06 surpassed the annual estimate of $6.57, marking a 31% increase year-over-year. This growth was driven by EBIT improvements in both segments, with Reinforcement Materials and Performance Chemicals seeing EBIT increases of 11% and 31%, respectively.
Financial Achievements and Strategic Investments
Cabot Corp's fiscal year 2024 cash flows from operations amounted to $692 million, facilitating capital investments of $241 million and shareholder returns through $93 million in dividends and $172 million in share repurchases. The company also reached the high end of its 2021 Investor Day targets for adjusted EPS CAGR and cumulative discretionary free cash flow.
Notably, Cabot Corp was selected by the U.S. Department of Energy for a $50 million award to construct the first commercial-scale facility for battery-grade carbon nanotubes and conductive additive dispersions in the U.S., with final terms expected by January 2025.
Segment Analysis and Cash Flow
In the Reinforcement Materials segment, fourth-quarter EBIT decreased by $11 million year-over-year, primarily due to lower volumes in the Americas and higher costs, despite improved pricing and product mix. Conversely, the Performance Chemicals segment saw an $8 million EBIT increase, driven by higher volumes and a favorable product mix.
Cabot Corp ended the fourth quarter with a cash balance of $223 million. Operating cash flows for the quarter were $204 million, supporting $92 million in capital expenditures, $24 million in dividends, and $66 million in share repurchases.
Commentary and Outlook
Sean Keohane, Cabot President and CEO, stated, "I am pleased to end the fiscal year with a solid fourth quarter with Adjusted EPS of $1.80, which represents an increase of 9% over the fourth quarter of fiscal 2023. Our strong Adjusted EPS results of $7.06 for the fiscal year, which represent an increase of 31% over fiscal 2023, were driven by EBIT growth in both segments as our teams around the world did a fantastic job executing and delivering growth despite the continued challenging business environment."
Looking ahead, Cabot Corp anticipates adjusted EPS for fiscal 2025 to range between $7.40 and $7.80, supported by growth in the Reinforcement Materials segment and recovery in Performance Chemicals. The company expects robust operating cash flow and discretionary free cash flow to continue supporting shareholder returns.
Conclusion
Cabot Corp's fiscal year 2024 results reflect strong operational performance and strategic investments, positioning the company for continued growth. Despite missing some analyst estimates, the company's achievements in EBIT growth and cash flow generation underscore its resilience in a challenging market environment. Investors and stakeholders will be keen to see how Cabot Corp leverages its strategic initiatives and DOE award to drive future growth.
Explore the complete 8-K earnings release (here) from Cabot Corp for further details.
