Cabot (NYSE:CBT) reported third-quarter fiscal 2026 adjusted earnings per share of $1.67, up 4% sequentially, as strength in its Performance Chemicals segment helped offset lower earnings in Reinforcement Materials.
The company also tightened its full-year adjusted EPS guidance to a range of $6.15 to $6.45, compared with its previous outlook of $6.00 to $6.50. Management cited differing demand and cost scenarios amid geopolitical uncertainty and volatility in oil-related prices.
Leadership transition planned for fiscal year-end
Keohane said he will retire effective Sept. 30, 2026, after nearly 25 years with Cabot and 10 years as president and CEO. He will continue in an advisory role through the end of calendar 2026 to support the transition.
The board appointed Executive Vice President and Chief Financial Officer Erica McLaughlin as Cabot’s next president and CEO. McLaughlin has spent nearly 25 years at the company and previously held positions including vice president of business operations for Reinforcement Materials and general manager of the tire business.
McLaughlin said Cabot’s strategy and priorities will remain unchanged, including performance in core businesses, advancing growth initiatives, investing in innovation, disciplined capital allocation and pursuing opportunities that support long-term value creation. The company has initiated a search for McLaughlin’s successor as CFO.
Performance Chemicals earnings rise as battery materials expand
Performance Chemicals delivered segment EBIT of $68 million in the quarter, up $11 million year over year, or 19%, according to Keohane. The increase reflected higher volumes and improved gross profit per ton.
Battery materials was a major source of volume growth, supported by electric vehicle and battery energy-storage applications, as well as participation with global battery manufacturers. Cabot also recorded stronger fumed metal oxides volumes, driven by electronics-related demand.
Management said gross profit per ton improved due to a more favorable product mix and pricing actions taken before raw-material costs rose. In the fiscal fourth quarter, however, Cabot expects lower seasonal volumes and margins to normalize as higher raw-material costs catch up with third-quarter pricing actions.
Keohane reaffirmed Cabot’s expectation that its battery materials product line will generate about $40 million of EBITDA in fiscal 2026. The business had trailing 12-month EBITDA margins of approximately 24% at the end of the third quarter, he said.
The company is revising its U.S. battery-materials expansion plan, replacing a previously contemplated greenfield facility in Michigan with capacity additions at two existing U.S. sites. Cabot expects to invest about $125 million in those projects, with additional capacity anticipated to come online in 2028. The spending is already included within the company’s existing capital-expenditure envelope.
Keohane said the brownfield approach would offer greater flexibility and capital efficiency while allowing Cabot to align capacity with customer startup schedules. He said the additions should support roughly three years of the company’s growth expectations, while Cabot develops further expansion options across its global manufacturing network.
Reinforcement Materials faces pricing pressure
Reinforcement Materials generated third-quarter EBIT of $97 million, down from $128 million in the prior-year quarter. EBITDA was $117 million, with a 20% EBITDA margin.
The earnings decline primarily reflected lower gross profit per ton tied to calendar 2026 tire-customer agreements. Higher volumes and a more favorable regional product mix partially offset the pricing pressure.
Global Reinforcement Materials volumes rose 5% from a year earlier, including a 10% increase in Asia Pacific and a 4% increase in the Americas. Management said the growth included contributions from the ramp-up of Indonesian capacity and a recently acquired Mexican asset, along with higher base-business volumes in the Americas.
For the fourth quarter, Cabot expects a modest sequential decline in Reinforcement Materials EBIT, driven by normal seasonal demand reductions and a less favorable regional product mix, particularly in Europe.
Keohane said tire-import trends had been encouraging. European Union tire imports were down 16% year to date through April compared with the same 2025 period, while North American imports declined about 3%. He also pointed to recently implemented EU anti-dumping duties on Chinese tire imports, which he said could support the European tire industry over time.
Cash flow, capital spending and outlook
Cabot generated $75 million in operating cash flow during the third quarter, despite approximately $44 million of higher net working capital associated with rising raw-material costs. The company invested $38 million in capital expenditures and returned $24 million to shareholders through dividends.
Although Cabot did not repurchase stock during the quarter, McLaughlin said it had repurchased $101 million of shares year to date and expects to resume buybacks in the fourth quarter.
The company ended the quarter with $250 million of cash and cash equivalents and approximately $1.3 billion of liquidity. Debt stood at about $1.3 billion, and net debt to EBITDA was 1.4 times as of June 30. Cabot expects to refinance a public bond maturing in September during the fourth quarter.
Cabot narrowed its fiscal 2026 capital-expenditure forecast to $200 million to $215 million, reducing the high end by $15 million. It also updated its expected operating tax-rate range to 28% to 30%, reflecting changes in the anticipated geographic mix of earnings.
Looking beyond the current fiscal year, Keohane said Cabot sees growth support from infrastructure applications such as wire and cable, semiconductor-related electronics demand, and battery materials. He said the company will continue to pursue network optimization, operational improvements, targeted growth investments, dividends and share repurchases while maintaining financial flexibility.
About Cabot (NYSE:CBT)
Cabot Corporation is a global specialty chemicals and performance materials company headquartered in Boston, Massachusetts. Founded in 1882 by Godfrey Lowell Cabot, the company has grown into a diversified manufacturer with operations across North America, Europe, Asia and Latin America. Cabot serves a wide range of end markets, including automotive, industrial, energy, and consumer products, supplying essential ingredients that enhance performance, durability and functionality.
The company operates two primary segments: Reinforcement Materials and Performance Materials.
