Third quarter fiscal year 2026
Filed Aug 3, 2026Third Quarter 2026 Diluted earnings per share (“EPS”) of $0.12 and Adjusted EPS of $1.67
Performance Chemicals EBIT increased and Reinforcement Materials volumes grew, but Reinforcement Materials EBIT declined, reported net income fell sharply, and fiscal 2026 Adjusted EPS guidance was tightened.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales and other operating revenuesGAAP | $982 million | – | – |
| Net income attributable to Cabot CorporationGAAP | $6 million | – | – |
| Net earnings per share attributable to Cabot CorporationGAAP | $0.12 | – | – |
| Adjusted EPSnon-GAAP | $1.67 | 4% increase | – |
| Certain items after tax per shareother | $(1.55) | – | – |
| Reinforcement Materials segment EBITother | $97 million | – | $31 million decrease |
| Performance Chemicals segment EBITother | $68 million | – | $11 million increase |
| Cash flows from operating activitiesGAAP | $75 million | – | – |
| Capital expendituresother | $38 million | – | – |
| Effective tax rateGAAP | 79% | – | – |
| Operating tax rate as of June 30, 2026other | 29% | – | – |
| Nine Months Ended Net sales and other operating revenuesGAAP | $2,735 million | – | – |
| Nine Months Ended Net income attributable to Cabot CorporationGAAP | $147 million | – | – |
| Nine Months Ended Net earnings per share attributable to Cabot CorporationGAAP | $2.77 | – | – |
| Nine Months Ended Adjusted EPSnon-GAAP | $4.82 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Reinforcement MaterialsHigher volumes and a more favorable regional product mix were partially offset by lower gross profit per ton, primarily due to the outcomes of calendar year 2026 customer agreements. | not reported | – | 5% volume increase |
| Performance ChemicalsIncreased volumes and higher gross profit per ton, with battery materials and fumed metal oxides volume growth. Higher gross profit per ton reflected price increases implemented ahead of rising raw material costs and a favorable product mix. | not reported | – | – |
fiscal 2026 outlook
- Tax rate28% to 30%
- NoteAdjusted EPS of $6.15 to $6.45 per share
- Noteapproximately $40 million of EBITDA for the full fiscal year in the battery materials product line
Capital returns
- $24 million for the payment of dividends
What drove it
- Reinforcement Materials volumes increased by 5%, driven by higher volumes in Asia and the Americas, including higher volumes from the capacity addition in Indonesia and the acquisition in Mexico.
- Asia Pacific Reinforcement Materials volumes increased 10%, Europe, Middle East, Africa volumes declined (4%), and Americas volumes increased 4%.
- Battery materials volumes increased on higher demand for electric vehicles and battery energy storage systems and strengthening participation with market-leading global battery manufacturers.
- Fumed metal oxides volumes increased from growth in electronics applications.
- The company advanced investments to expand global conductive additive capacity in the United States and China.
Concerns
- Reinforcement Materials EBIT declined by $31 million due primarily to lower gross profit per ton.
- Net income attributable to Cabot Corporation was $6 million compared with $101 million in the prior-year quarter.
- The quarter included an after-tax per share charge from certain items of $1.55, primarily related to restructuring actions and the termination of employee benefit plans.
- Tax expense was $46 million and the effective tax rate was 79%, including a net discrete tax expense of $19 million primarily related to valuation allowance changes following the cessation of carbon black production at the Campana, Argentina plant.
- Rapidly rising raw material costs contributed to $44 million of higher net working capital.
What to watch
- Execution of the global conductive additive capacity expansion in the United States and China.
- Progress toward approximately $40 million of EBITDA in the battery materials product line for fiscal 2026.
- Reinforcement Materials gross profit per ton and the impact of calendar year 2026 customer agreements.
- Performance Chemicals volume and margin momentum in battery materials, fumed metal oxides, and electronics applications.
- The planned leadership transition, with Erica McLaughlin succeeding Sean Keohane as President and CEO effective October 1, 2026.
Balance sheet and cash flow
- Cash and cash equivalents balance of $250 million
- Cash flows from operating activities were a source of $75 million
- $44 million of higher net working capital due to the rapidly rising raw material costs during the quarter
- $38 million in capital expenditures
- $1.3 billion of available liquidity
- Net debt to EBITDA ratio of 1.4 times as of June 30, 2026
Analysis
Cabot reported third-quarter net sales and other operating revenues of $982 million, compared with $923 million in the prior-year quarter. GAAP net income attributable to Cabot Corporation was $6 million and GAAP EPS was $0.12, compared with $101 million and $1.86, respectively. Adjusted EPS was $1.67, compared with $1.90 in the prior-year quarter, while management stated that Adjusted EPS increased 4% sequentially. Reported earnings included an after-tax per share charge from certain items of $1.55, primarily from restructuring actions and the termination of employee benefit plans.
Segment performance was divergent. Reinforcement Materials delivered segment EBIT of $97 million, down by $31 million year over year, as higher volumes and a more favorable regional product mix were more than offset by lower gross profit per ton associated primarily with calendar year 2026 customer agreements. Global Reinforcement Materials volumes increased 5%, led by a 10% increase in Asia Pacific and a 4% increase in the Americas, while Europe, Middle East, Africa volumes declined (4%). Performance Chemicals segment EBIT was $68 million, up by $11 million, reflecting increased volumes and higher gross profit per ton.
Performance Chemicals demand was supported by higher battery materials volumes, tied to electric vehicle and battery energy storage system demand and greater participation with market-leading global battery manufacturers. Fumed metal oxides volumes also increased on electronics applications growth. Margin improvement in this segment reflected price increases implemented ahead of rising raw material costs and a favorable product mix. Cabot is expanding global conductive additive capacity through targeted investments in the United States and China and reaffirmed its expectation for approximately $40 million of EBITDA from battery materials in fiscal 2026.
Cash flows from operating activities were a source of $75 million during the quarter. The company identified $44 million of higher net working capital due to rapidly rising raw material costs, $38 million in capital expenditures, and $24 million for dividends. Cabot ended the quarter with $250 million in cash and cash equivalents, $1.3 billion of available liquidity, and a net debt to EBITDA ratio of 1.4 times. The reported tax rate was elevated at 79%, including a $19 million net discrete tax expense connected to valuation allowance changes after the Campana, Argentina plant cessation.
For fiscal 2026, Cabot tightened Adjusted EPS guidance to $6.15 to $6.45 per share from $6.00 to $6.50 per share. The company expects a full-year operating tax rate in the range of 28% to 30%. The quarter also included a planned leadership transition: Erica McLaughlin was elected to succeed Sean Keohane as President and CEO and join Cabot's Board of Directors, effective October 1, 2026.
Management, verbatim
I am pleased with our strong third-quarter performance as our teams continued to execute at a high level despite a dynamic operating environment. We delivered adjusted EPS of $1.67, an increase of 4% sequentially, driven by strong performance in our Performance Chemicals segment.
Sean Keohane, Cabot President and Chief Executive Officer
Given the year-to-date performance and our expectations for the fourth fiscal quarter, we are tightening our fiscal 2026 Adjusted EPS guidance range from $6.00 to $6.50 per share to $6.15 to $6.45 per share.
Sean Keohane, Cabot President and Chief Executive Officer
We are pleased with the continued momentum in battery materials this fiscal year and reaffirm our expectation of approximately $40 million of EBITDA in fiscal 2026.
Sean Keohane, Cabot President and Chief Executive Officer
Not in the filing
stated, not guessed- Gross margin
- Operating income
- Segment revenue for Reinforcement Materials
- Segment revenue for Performance Chemicals
- Prior-quarter net sales and other operating revenues
- Prior-quarter GAAP net income
- Prior-quarter GAAP EPS
- Prior-quarter Adjusted EPS
- Free cash flow
- Share repurchases
- Total debt
- Revenue guidance
- Gross margin guidance
- Operating expenses guidance
- Prior outlook section for comparison with actual reported results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.