Cabot (CBT) investor relations material

Executive summary

• Delivered Adjusted EPS of $1.61 for Q2 FY2026, with net income of $68 million and diluted EPS of $1.27, reflecting strong execution amid geopolitical and cost challenges.

• Battery Materials revenue grew 43% year-over-year, with trailing 12-month EBITDA margin of 24%, supporting growth in energy storage and EV markets.

• Announced a 5% increase in quarterly dividend, raising the annualized dividend to $1.89 per share.

• Initiated asset rationalization and optimization, including closures in South America and Europe, targeting $22 million in annual cost benefits by mid-2027, with $24 million in closure costs.

• Returned $73 million to shareholders in Q2 via $24 million in dividends and $49 million in share repurchases.

Financial highlights

• Q2 FY2026 net sales were $904 million, down from $936 million in Q2 FY2025, mainly due to less favorable pricing and product mix in Reinforcement Materials.

• Adjusted EPS was $1.61, down 15% year-over-year from $1.90, mainly due to lower Reinforcement Materials results.

• Operating cash flow for Q2 was $77 million; discretionary free cash flow was $63 million; capital expenditures were $45 million.

• Ended the quarter with $252 million in cash and $1.3 billion in liquidity; net debt to EBITDA ratio at 1.5x.

• Returned $73 million to shareholders in Q2 via dividends and share repurchases.

Outlook and guidance

• Reaffirmed full-year Adjusted EPS guidance of $6.00–$6.50, with stable margins expected despite higher input costs.

• Guidance reflects uncertainty in customer demand, especially in Q4 due to Middle East conflict and macroeconomic factors.

• Sequential EBIT improvement expected in Reinforcement Materials for Q3, driven by favorable mix and efficiency gains, with Performance Chemicals EBIT expected to remain stable.

• Full-year capital expenditures expected between $200–$230 million.

• Operating tax rate for FY2026 expected in the range of 27% to 29%.