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Dec 31, 2019
Cabot Q1 2020 Earnings Report
Results for the first quarter of fiscal year 2020 were announced.
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
Revenue by Segment
Reinforcement Materials Revenue
CapyFin.comPerformance Chemicals Revenue
CapyFin.com 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