Cabot Q3 2020 Earnings Report
Key Takeaways
Cabot Corporation reported a diluted loss per share of $0.12 and an adjusted EPS loss of $0.07 for the third quarter of fiscal year 2020. The results were significantly impacted by the COVID-19 pandemic, which led to lower demand across all segments. However, the company saw strong cash flow generation and maintained a strong liquidity position.
GAAP EPS was a loss of $0.12, compared to earnings of $0.55 in the prior fiscal year third quarter.
Adjusted EPS was a loss of $0.07 compared to Adjusted EPS of $1.00 in the prior fiscal year third quarter as COVID-19 impacted demand across all segments.
Strong cash flow generation with cash flow from operations of $149 million in the third quarter driven by continued working capital improvements.
Liquidity remains strong at approximately $1.4 billion; Debt decrease of $13 million during the quarter; Debt to EBITDA of 2.9 times as of June 30, 2020.
Cabot
Cabot
Cabot Revenue by Segment
Forward Guidance
Cabot anticipates substantial volume and EBIT improvement in the fourth quarter as compared to the third quarter as demand for products increases aligned with an improving economic outlook and a recovery in the underlying automotive and replacement tire markets.
Positive Outlook
- Significant sequential improvement in demand in Reinforcement Materials in the fourth fiscal quarter given that customer plants have come back on-line in Europe and the Americas.
- Expect a modest improvement in volumes and product mix in Performance Chemicals.
- Consistent operating cash flow remains a core strength of our company.
- Expect improving business results and another solid quarter of operating cash flows in the fourth quarter.
- Actions taken so far this year to reduce costs will continue to benefit results in the fourth quarter.
Challenges Ahead
- Higher fixed costs in Performance Chemicals largely offset by higher fixed costs due to costs associated with the start-up of our new fumed metal oxides plant in North America and synchronized turnarounds driven by our fence-line partners.
- The duration and scope of the COVID-19 pandemic continues to be uncertain and visibility is limited.
- Challenges brought on by the COVID-19, pandemic.
- Uncertainty in economic outlook.
- Uncertainty in recovery in the underlying automotive and replacement tire markets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income