Cabot Q1 2020 Earnings Report
Key Takeaways
Cabot Corporation's first quarter fiscal year 2020 results declined compared to the first quarter of fiscal year 2019, which included $10 million of EBIT from the Specialty Fluids business that was divested in the third quarter of last year. Performance Chemicals EBIT increased 14% due to strong volumes. The company finalized 2020 Reinforcement Materials customer negotiations and announced the acquisition of Shenzhen Sanshun Nano.
Performance Chemicals EBIT up 14% compared to the first quarter of fiscal 2019 due to improved volumes
Strong cash flow generation driven by continued working capital improvements
Returned $54 million in the quarter to shareholders through share repurchases and dividends
Announced agreement to acquire Shenzhen Sanshun Nano – a leading producer of carbon nanotubes (CNT) for lithium-ion batteries
Cabot
Cabot
Cabot Revenue by Segment
Forward Guidance
While the first fiscal quarter was impacted by more pronounced year-end customer inventory management in Reinforcement Materials, we expect company earnings to improve as we move through this fiscal year. We expect full year Adjusted EPS to be in the $3.60 to $3.90 band of our previously communicated range. Impacts from recent developments with the coronavirus are difficult to predict and we have therefore not included impacts in our second quarter or full-year outlook.
Positive Outlook
- Reinforcement Materials will benefit from the calendar year 2020 customer agreements
- Volumes will return to a more normalized level starting in the second fiscal quarter.
- Volumes have stabilized at a higher level than the first half of fiscal 2019 in the specialty carbons and specialty compounds product lines
- Purification Solutions segment will continue to see year-over-year improvement in quarterly EBIT.
- Pleased to see the first phase of a trade deal between the U.S. and China
Challenges Ahead
- Challenging price environment for fumed silica in China and Europe that we experienced in the first quarter will continue in the near-term
- Impacts from recent developments with the coronavirus are difficult to predict
- Continuing uncertainty in the overall business environment, particularly in China
- Continue to manage costs aggressively
- Continue to manage net working capital aggressively
Revenue & Expenses
Visualization of income flow from segment revenue to net income