• Adjusted Earnings Per Share (EPS): $7.06 for fiscal year 2024, a 31% increase year over year.
• Total Segment EBIT: $701 million, a 15% increase year over year.
• Reinforcement Materials EBIT: $537 million, an 11% increase year over year.
• Performance Chemicals EBIT: $164 million, a 31% increase year over year.
• Operating Cash Flow: $692 million for fiscal year 2024.
• Discretionary Free Cash Flow: $479 million for fiscal year 2024.
• Dividends Paid: $93 million in fiscal year 2024.
• Share Repurchases: $172 million in fiscal year 2024.
• Fourth Quarter Adjusted EPS: $1.80, a 9% increase from the same quarter last year.
• Fourth Quarter Cash Flow from Operations: $204 million.
• Fourth Quarter Discretionary Free Cash Flow: $105 million.
• Capital Expenditures (Q4): $92 million.
• Debt Balance: $1.1 billion.
• Net Debt to EBITDA: 1.2 times.
• Operating Tax Rate for Fiscal Year 2024: 26%.

• Warning! GuruFocus has detected 11 Warning Signs with FTS.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cabot Corp (NYSE:CBT) achieved an adjusted earnings per share growth CAGR of 12% over the past three years, reaching the top end of their target range.
• The company generated $1.2 billion of cumulative discretionary free cash flow over the three-year period, surpassing their Investor Day goal.
• In fiscal year 2024, Cabot Corp (NYSE:CBT) delivered a 31% year-over-year increase in adjusted earnings per share and a 15% increase in total segment EBIT.
• The performance chemicals segment saw a 31% year-over-year increase in EBIT, driven by higher volumes and improved product mix.
• Cabot Corp (NYSE:CBT) maintained a strong cash flow, generating $692 million in operating cash flow and $479 million in discretionary free cash flow in fiscal year 2024.

Negative Points

• Reinforcement materials segment experienced an $11 million decrease in EBIT in the fourth quarter due to lower volumes and higher costs.
• The company faced challenges from higher levels of tire imports from Asia, impacting volumes in the Americas.
• The operating tax rate is expected to increase to a range of 27% to 29% in fiscal 2025, driven by changes in Argentina and new global tax implementations.
• Cabot Corp (NYSE:CBT) experienced higher costs in the fourth quarter due to increased maintenance and incentive compensation expenses.
• The company anticipates higher costs in fiscal 2025 from the startup of air pollution control projects and new production units.

Q & A Highlights

Q: The silica business seems like a stronger area in performance chemicals. Are you seeing any slowdown in semiconductor or automotive applications? A: Sean Keohane, CEO, responded that they saw a return to normalized volumes and mix in the semiconductor application in the back half of 2024, with no particular signs of rationing. For automotive, the outlook for 2025 is for production growth, albeit slightly lower than previous forecasts.

Q: What's the revenue capacity of the EV battery materials plant you're targeting for the US? A: Sean Keohane, CEO, stated that the plant is expected to start up in 2028, producing carbon nanotubes and conductive additive dispersions. The project is expected to generate IRRs around 20%, with a total capital of $180 million, $50 million of which is covered by a grant.

Q: What are you seeing in terms of RM demand and the dynamic between Asian imports coming into the US? A: Sean Keohane, CEO, noted a return to normalized patterns in October, with modest growth expected in 2025. There are signs of pushback against elevated tire imports, with tariffs and antidumping duties being imposed, which could impact the market dynamics.

Q: How are your price negotiations going in the United States for the upcoming year? A: Sean Keohane, CEO, mentioned that negotiations are ongoing and it would be inappropriate to comment on outcomes. However, they expect margin improvement in reinforcement materials for the fiscal year.

Q: Can you comment on your battery materials business performance and energy benefits in Europe? A: Sean Keohane, CEO, reported increased volumes and profits in battery materials, with significant investment in future projects. Regarding energy, the forward curve on oil is trending down, which may pressure profits from energy centers in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.