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Sep 30, 2020
Cabot Q4 2020 Earnings Report
Cabot reported a net loss and adjusted EPS that was lower than the prior year's quarter.
Key Takeaways
Cabot Corporation reported a net loss of $272 million, or $4.81 per share, for the fourth quarter of fiscal year 2020, compared to a net income of $33 million, or $0.55 per share, in the prior year's quarter. Adjusted EPS was $0.68, compared to $1.05 in the prior year's quarter. The results were impacted by the COVID-19 pandemic and certain items, including the loss on the sale and asset impairment related to the Purification Solutions agreements with ADES and tax certain items mainly associated with an increase in the valuation allowance associated with U.S. deferred tax assets.
GAAP EPS was a loss of $4.81, compared to earnings of $0.55 in the prior fiscal year fourth quarter.
Adjusted EPS of $0.68 compared to $1.05 in the prior fiscal year fourth quarter
Fiscal fourth quarter volumes in Reinforcement Materials rebounded strongly from the third quarter, increasing by 56%, and EBIT improved by $64 million
Continued strong operating cash flow of $99 million in the fourth quarter and $377 million for the full fiscal year
Cabot
Cabot
Cabot Revenue by Segment
Revenue by Segment
Reinforcement Materials Revenue
CapyFin.comPerformance Chemicals Revenue
CapyFin.com Forward Guidance
Cabot expects both year-over-year and sequential EBIT improvement as they look ahead to the first quarter of fiscal 2021. Based on the current market environment, Cabot expects adjusted earnings per share in the first fiscal quarter to be between $0.80 and $0.90.
Positive Outlook
- Reinforcement Materials is expected to benefit from improved margins, particularly in Asia
- Performance Chemicals will benefit in both volumes and product mix from a strengthening automotive end market.
- Expect both year-over-year and sequential EBIT improvement as we look ahead to the first quarter of fiscal 2021.
- The company is encouraged by the pace of recovery we are seeing in the automotive and tire markets.
- Our team remains focused on executing our Advancing the Core strategy and emerging from this crisis an even stronger company.
Challenges Ahead
- The expectation assumes that the resurgence in COVID-19 infections will not cause a significant disruption to the ongoing business recovery.
- Due to continued economic uncertainty related to the impacts of the COVID-19 pandemic, we are not providing fiscal 2021 full-year earnings guidance at this time.
- Globally, volumes decreased 11% year-over-year as the COVID-19 pandemic impacted demand levels in Reinforcement Materials
- EBIT in Performance Chemicals decreased by $16 million compared to the fourth quarter of fiscal 2019 primarily due to a less favorable product mix in the specialty carbons and fumed metal oxides product lines, and by a more competitive pricing environment in our fumed metal oxides product line.
- EBIT in Purification Solutions decreased by $3 million compared to the fourth quarter of fiscal 2019 primarily due to the impact from reducing inventory levels to drive strong cash flow.
Revenue & Expenses
Visualization of income flow from segment revenue to net income