Cabot Announces Third Quarter 2009 Operating Results
Operating Profits Up
(Logo: http://www.newscom.com/cgi-bin/prnh/20000323/CABOTLOGO )
Quarterly Highlights
- Volumes in all key businesses improved sequentially with emerging markets showing strongest signs of recovery.
- Higher carbon black unit margins contributed to sequential performance improvement.
- Restructuring and cost saving actions are ahead of plan and benefited results.
- Strategic commitment to emerging market expansion continues with the
completion of 150,000 metric tons of carbon black capacity in
Tianjin, China . - Cash position remains strong, with a quarter end cash balance of
$177 million after debt reduction of$46 million and dividend payments of$12 million .
(In millions, except per share amounts)
2009 2008
---- ----
Third First Third First
Quarter 9 months Quarter 9 months
------- -------- ------- --------
Net sales $511 $1,633 $840 $2,337
Net (loss)/ income $(12) $(66) $27 $74
Diluted (loss)/ earnings per
share from continuing
operations $(0.19) $(1.04) $0.43 $1.16
Less: Certain items per share (0.25) (0.90) (0.09) (0.11)
Adjusted earnings per share $0.06 $(0.14) $0.52 $1.27
----- ------ ----- -----
For the third quarter of fiscal 2009, the Company reported a net loss of
Commenting on the results,
Financial Detail
Segment Results
Core Segment- When compared to the second quarter of fiscal 2009, Rubber
Blacks profitability increased by
When compared to the second quarter of fiscal 2009, profitability in the
Supermetals Business increased by
Performance Segment- When compared to the second quarter of fiscal 2009,
profitability in the Performance Segment increased by
Specialty Fluids Segment- When compared to the second quarter of fiscal
2009, profitability in the Specialty Fluids Segment increased by
New Business Segment- Year to date cash flow for the New Business Segment
improved by
Cash Performance- During the third quarter of fiscal 2009, operations
generated
Taxes- During the third quarter of fiscal 2009, the Company recorded a
tax provision of
Outlook
Commenting on the outlook for the Company, Prevost said, "We are
encouraged by the growth in our sales volumes and believe the
non-discretionary nature of our customers' end products will continue to
provide support for the recovery. Although we remain cautious about the speed
of the recovery, we have positioned the Company well to capitalize on demand
improvements in our key end markets. We have completed the doubling of
capacity at our carbon black plant in
Earnings Call
The Company will host a conference call with industry analysts at
Forward-Looking Statements- This earnings release contains
forward-looking statements based on management's current expectations,
estimates and projections. All statements that address expectations or
projections about the future (including our expectations concerning the
annualized fixed cost savings, and the costs associated with, we expect from
our restructuring initiative and demand for our products), strategy for
growth, market position, and expected financial results are forward-looking
statements. Some of the forward-looking statements may be identified by words
like "expects," "anticipates," "plans," "intends," "projects," "indicates,"
and similar expressions. These statements are not guarantees of future
performance and involve a number of risks, uncertainties and assumptions.
Many factors, including those discussed more fully elsewhere in this release
and in documents filed with the
Use of Non-GAAP Financial Measures- The preceding discussion of our results and the accompanying financial tables report adjusted EPS and also include information on our reportable segment sales and segment (or business) operating profit before taxes ("PBT"). Adjusted EPS and segment PBT are non-GAAP financial measures and are not intended to replace EPS and income (loss) from continuing operations before taxes, equity in net income of affiliated companies and minority interest, respectively, the most directly comparable GAAP financial measures. Both EPS and adjusted EPS are calculated on a diluted share basis. In calculating adjusted EPS and segment PBT, we exclude certain items, meaning items that are significant and unusual or infrequent and not believed to reflect the true underlying business performance, and, therefore, are not allocated to a segment's results or included in adjusted EPS. Further, in calculating segment PBT we include equity in net income of affiliated companies, royalties paid by equity affiliates, minority interest and allocated corporate costs but exclude interest expense, foreign currency translation gains and losses, interest income, dividend income and unallocated corporate costs. Our chief operating decision-maker uses adjusted EPS to evaluate the underlying earnings power of the Company. Segment PBT is used to evaluate changes in the operating results of each segment before non-operating factors and before certain items and to allocate resources to the segments. We believe that these non-GAAP measures also assist our investors in evaluating the changes in our results and the Company's performance. A reconciliation of adjusted EPS to EPS is shown in the table titled Certain Items and Reconciliation of Adjusted EPS, and a reconciliation of total segment PBT to income (loss) from operations before taxes, equity in net income of affiliated companies and minority interest is shown in the table titled Summary Results by Segments. The certain items that are excluded from our calculation of adjusted EPS and segment PBT are detailed in the table titled Certain Items and Reconciliation of Adjusted EPS.
Third Quarter Earnings Announcement, Fiscal 2009
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------
Periods ended June 30
Dollars in millions, except per share Three Months Nine Months
amounts (unaudited) 2009 2008 2009 2008
------------------------------------------------------------------------
Net sales and other operating revenues
Cost of sales 443 703 1,478 1,966
--- --- ----- -----
Gross profits 68 137 155 371
Selling and administrative expenses 50 67 160 190
Research and technical expenses 16 20 53 55
-- -- -- --
Income (loss) from operations 2 50 (58) 126
Other income and expense
Interest and dividend income - - 2 3
Interest expense (6) (9) (23) (28)
Other income (expense) 2 (2) (13) (5)
-- --- --- ---
Total other income and expense (4) (11) (34) (30)
-- --- --- ---
(Loss) income from operations before
income taxes (2) 39 (92) 96
(Provision) benefit for income taxes (7) (8) 23 (13)
Equity in net income of affiliated
companies, net of tax - 2 2 6
Minority interest in net income, net of
tax (3) (6) 1 (15)
-- -- - ---
(Loss) income from continuing
operations (12) 27 (66) 74
Loss from discontinued operations, net of
tax (A) - - - -
---- --- ---- ---
Net (loss) income $(12) $27 $(66) $74
---- --- ---- ---
Diluted (loss) earnings per share of
common stock
Continuing operations $(0.19) $0.43 $(1.04) $1.16
Discontinued operations (A) (0.01) - (0.01) -
----- --- ----- ---
Net (loss) income per share $(0.20) $0.43 $(1.05) $1.16
Weighted average common shares
outstanding
Diluted 63 63 63 63
(A) Amounts relate to legal settlements in connection with our
discontinued operations.
Third Quarter Earnings Announcement, Fiscal 2009
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
-----------------------------------------------------------------------
Periods ended June 30
Dollars in millions, except per share Three Months Nine Months
amounts (unaudited) 2009 2008 2009 2008
-----------------------------------------------------------------------
SALES
Core Segment $310 $537 $1,049 $1,511
Rubber blacks 272 499 943 1,364
Supermetals 38 38 106 147
Performance Segment 149 247 438 695
Performance products 98 175 293 481
Fumed metal oxides 51 72 145 214
New Business Segment 14 14 48 37
Inkjet colorants 10 11 32 30
Aerogel(A) 2 2 11 5
Superior MicroPowders 2 1 5 2
Specialty Fluids Segment 19 17 45 49
-- -- -- --
Segment sales 492 815 1,580 2,292
Unallocated and other (A), (B) 19 25 53 45
-- -- -- --
Net sales and other operating
revenues $511 $840 $1,633 $2,337
---- ---- ------ ------
SEGMENT PROFIT
Core Segment $14 $41 $17 $89
Rubber blacks 11 43 18 87
Supermetals 3 (2) (1) 2
Performance Segment 10 32 12 95
New Business Segment (4) (9) (8) (30)
Specialty Fluids Segment 9 5 17 18
--- --- -- --
Total Segment Profit ( C ) 29 69 38 172
Interest expense (6) (9) (23) (28)
Certain items (D) (19) (8) (67) (10)
Unallocated corporate costs (E) (7) (8) (22) (25)
General unallocated expense (F) 1 (3) (16) (7)
Less: Equity in net income of
affiliated companies, net of tax - (2) (2) (6)
--- -- -- --
(Loss) income from continuing
operations before income taxes,
equity in net income of affiliated
companies and minority interest (2) 39 (92) 96
(Provision) benefit for income taxes (7) (8) 23 (13)
Equity in net income of affiliated
companies, net of tax - 2 2 6
Minority interest in net income, net
of tax (3) (6) 1 (15)
-- -- --- ---
(Loss) income from continuing
operations $(12) $27 $(66) $74
Loss from discontinued operations,
net of tax (G) - - - -
---- --- ---- ---
Net (loss) income $(12) $27 $(66) $74
---- --- ---- ---
Diluted (loss) earnings per share
of common stock
Continuing operations $(0.19) $0.43 $(1.04) $1.16
Discontinued operations (G) (0.01) - (0.01) -
----- --- ----- ---
Net (loss) income per share $(0.20) $0.43 $(1.05) $1.16
Weighted average common shares
outstanding
Diluted 63 63 63 63
Note: During the third quarter of fiscal 2008, management changed the
way it manages the Company's businesses. Accordingly, the segment
results for all periods presented have been revised to reflect these
changes.
(A) Royalty income received by the Aerogel business, which has been
included in Unallocated and other in prior periods, has been
reclassified to Segment sales for all periods presented above.
(B) Unallocated and other reflects an elimination for sales of one
equity affiliate, prior to the consolidation of its results
beginning April 1, 2008 , offset by royalties paid by equity
affiliates and other operating revenues and external shipping
and handling fees.
( C ) Segment profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess
segment performance and allocate resources. Segment profit
includes equity in net income of affiliated companies, royalty
income, minority interest and allocated corporate costs.
(D) Details of certain items are presented in the Certain Items and
Reconciliation of Adjusted EPS table.
(E) During the first quarter of fiscal 2009, management changed the
allocation method of its corporate costs to its segments. Under
this new method, costs that are not controlled by the segments and
which primarily benefit corporate interests are not allocated to
the segments. Prior periods have been recast to conform to the
new allocation method.
(F) General unallocated expense includes foreign currency transaction
gains (losses), interest income, and dividend income.
(G) Amounts relate to legal settlements in connection with our
discontinued operations.
Third Quarter Earnings Announcement, Fiscal 2009
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
-------------------------------------------------------------------------
June 30, September 30,
Dollars in millions, except share and per 2009 2008
share amounts (unaudited) (audited)
-------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $177 $129
Short-term marketable securities 1 1
Accounts and notes receivable, net of
reserve for doubtful accounts of $7 and $5 417 646
Inventories:
Raw materials 121 193
Work in process 53 58
Finished goods 141 246
Other 31 26
-- --
Total inventories 346 523
Prepaid expenses and other current
assets 45 72
Deferred income taxes 35 30
Assets held for sale - 7
--- ---
Total current assets 1,021 1,408
----- -----
Investments:
Equity affiliates 57 53
Long-term marketable securities and
cost investments 1 1
--- ---
Total investments 58 54
-- --
Property, plant and equipment 2,928 2,921
Accumulated depreciation and amortization (1,913) (1,839)
------ ------
Net property, plant and equipment 1,015 1,082
----- -----
Other assets:
Goodwill 35 34
Intangible assets, net of accumulated
amortization of $11 and $11 3 3
Assets held for rent 46 45
Deferred income taxes 196 173
Other assets 97 59
-- --
Total other assets 377 314
--- ---
Total assets $2,471 $2,858
====== ======
Third Quarter Earnings Announcement, Fiscal 2009
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
--------------------------------------------------------------------------
June 30, September 30,
Dollars in millions, except share and per 2009 2008
share amounts (unaudited) (audited)
--------------------------------------------------------------------------
Current liabilities:
Notes payable to banks $19 $91
Accounts payable and accrued liabilities 316 426
Income taxes payable 23 38
Deferred income taxes 4 7
Current portion of long-term debt 5 39
--- --
Total current liabilities 367 601
--- ---
Long-term debt 551 586
Deferred income taxes 10 18
Other liabilities 286 294
Minority interest 98 110
Stockholders' equity:
Preferred stock:
Authorized: 2,000,000 shares of $1 par value
Issued: None and none - -
Outstanding: None and none
Common stock:
Authorized: 200,000,000 shares of $1 par value
Issued: 64,109,606 and 65,403,100 shares 64 65
Outstanding: 64,015,510 and 65,277,715 shares
Less cost of 94,096 and 125,385 shares of
common treasury stock (3) (4)
Additional paid-in capital 13 21
Retained earnings 1,042 1,143
Deferred employee benefits (26) (30)
Notes receivable for restricted stock - (21)
Accumulated other comprehensive income 69 75
-- --
Total stockholders' equity 1,159 1,249
----- -----
Total liabilities and stockholders' equity
====== ======
CABOT CORPORATION
Fiscal 2008
--------------------------------------------------------------------
In millions, except
per share amounts
(unaudited) Dec. Q. Mar. Q. June Q. Sept. Q. FY
--------------------------------------------------------------------
Sales
Core Segment $463 $511 $537 $553 $2,064
Rubber blacks 410 454 499 505 1,868
Supermetals 53 57 38 48 196
Performance Segment 211 236 247 237 931
Performance products 141 164 175 165 645
Fumed metal oxides 70 72 72 72 286
New Business Segment 10 14 14 20 58
Inkjet colorants 8 11 11 13 43
Aerogel (A) 1 2 2 5 10
Superior MicroPowders 1 1 1 2 5
Specialty Fluids Segment 16 16 17 19 68
--------------------------------------------------------------------
Segment Sales 700 777 815 829 3,121
Unallocated and other
(A), (B) 11 9 25 25 70
--------------------------------------------------------------------
Net sales and other
operating revenues
--------------------------------------------------------------------
Segment Profit
Core Segment $19 $29 $41 $18 $107
Rubber blacks 16 28 43 21 108
Supermetals 3 1 (2) (3) (1)
Performance Segment 31 32 32 24 119
New Business Segment (12) (9) (9) (5) (35)
Specialty Fluids Segment 8 5 5 6 24
--------------------------------------------------------------------
Total Segment Profit
(Loss) ( C ) 46 57 69 43 215
Interest expense (9) (9) (9) (10) (37)
Certain items (D) 10 (12) (8) (3) (13)
Unallocated corporate
costs (E) (7) (10) (8) (3) (28)
General unallocated
expense (F) (4) (1) (3) (10) (18)
Less: Equity in net
income of affiliated
companies, net of tax (2) (2) (2) (2) (8)
--------------------------------------------------------------------
Income (loss) before
income taxes, equity
in net income of
affiliated companies
and minority interest 34 23 39 15 111
Benefit (provision) for
income taxes 6 (11) (8) (1) (14)
Equity in net income of
affiliated companies,
net of tax 2 2 2 2 8
Minority interest in
net income, net of tax (6) (3) (6) (5) (20)
--------------------------------------------------------------------
Income (loss) from
continuing operations 36 11 27 11 85
Loss from discontinued
operations, net of tax (G) - - - - -
Net income 36 11 27 11 85
Diluted earnings (loss)
per share of common stock
Continuing
operations $0.56 $0.17 $0.43 $0.18 $1.34
Discontinued
operations (G) - - - - -
--------------------------------------------------------------------
Net income (loss) $0.56 $0.17 $0.43 $0.18 $1.34
Weighted average common
shares outstanding
Diluted 64 64 63 64 64
--------------------------------------------------------------------
Fiscal 2009
--------------------------------------------------------------------
In millions,
except per share
amounts (unaudited) Dec. Q. Mar.
--------------------------------------------------------------------
Sales
Core Segment $444 $295 $310 $1,049
Rubber blacks 399 272 272 943
Supermetals 45 23 38 106
Performance Segment 157 132 149 438
Performance products 105 90 98 293
Fumed metal oxides 52 42 51 145
New Business Segment 18 16 14 48
Inkjet colorants 13 9 10 32
Aerogel (A) 4 5 2 11
Superior MicroPowders 1 2 2 5
Specialty Fluids Segment 15 11 19 45
--------------------------------------------------------------------
Segment Sales 634 454 492 1,580
Unallocated and other
(A), (B) 18 16 19 53
--------------------------------------------------------------------
Net sales and other
operating revenues $652 $470 $511 $1,633
--------------------------------------------------------------------
Segment Profit
Core Segment $27 $(24) $14 $17
Rubber blacks 24 (17) 11 18
Supermetals 3 (7) 3 (1)
Performance Segment 3 (1) 10 12
New Business Segment (3) (1) (4) (8)
Specialty Fluids Segment 4 4 9 17
--------------------------------------------------------------------
Total Segment Profit
(Loss) ( C ) 31 (22) 29 38
Interest expense (9) (8) (6) (23)
Certain items (D) (2) (46) (19) (67)
Unallocated corporate
costs (E) (7) (8) (7) (22)
General unallocated
expense (F) (10) (7) 1 (16)
Less: Equity in net
income of affiliated
companies, net of tax (2) - - (2)
--------------------------------------------------------------------
Income (loss) before
income taxes, equity
in net income of
affiliated companies
and minority interest 1 (91) (2) (92)
Benefit (provision) for
income taxes (1) 31 (7) 23
Equity in net income of
affiliated companies,
net of tax 2 - - 2
Minority interest in
net income, net of tax 2 2 (3) 1
--------------------------------------------------------------------
Income (loss) from
continuing operations 4 (58) (12) (66)
Loss from discontinued
operations, net of tax (G) - - - -
Net income 4 (58) (12) (66)
Diluted earnings (loss) per
share of common stock
Continuing
operations $0.07 $(0.92) $(0.19) $(1.04)
Discontinued
operations (G) - - (0.01) (0.01)
--------------------------------------------------------------------
Net income (loss) $0.07 $(0.92) $(0.20) $(1.05)
Weighted average common
shares outstanding
Diluted 64 63 63 63
--------------------------------------------------------------------
Note: During the third quarter of fiscal 2008, management changed the
way it manages the Company's businesses. Accordingly, the segment
results for all periods presented have been revised to reflect these
changes.
(A) Royalty income received by the Aerogel business, which has been
included in Unallocated and other in prior periods, has been
reclassified to Segment sales for all periods presented above.
(B) Unallocated and other reflects an elimination for sales of one
equity affiliate, prior to the consolidation of its results
beginning April 1, 2008 , offset by royalties paid by equity
affiliates and other operating revenues and external shipping and
handling fees.
( C ) Segment profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess
segment performance and allocate resources. Segment profit
includes equity in net income of affiliated companies, royalty
income, minority interest and allocated corporate costs.
(D) Details of certain items are presented in the Certain Items and
Reconciliation of Adjusted EPS table.
(E) During the first quarter of fiscal 2009, management changed the
allocation method of its corporate costs to its segments. Under
this new method, costs that are not controlled by the segments and
which primarily benefit corporate interests are not allocated to
the segments. Prior periods have been recast to conform to the
new allocation method.
(F) General unallocated expense includes foreign currency transaction
gains (losses), interest income, and dividend income.
(G) Amounts relate to legal settlements in connection with our
discontinued operations.
Third Quarter Earnings Announcement, Fiscal 2009
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS
-------------------------------------------------------------------------
Periods ended
June 30 Three Months Nine Months
------------------------- -------------------------
Dollars in
millions, except
per share amounts
(unaudited) 2009 2008 2009 2008
per per per per
2009 share 2008 share 2009 share 2008 share
$ (A) $ (A) $ (A) $ (A)
--------------------------------------------- -------------------------
Certain items
before income
taxes
--------------
Environmental
reserves and
legal settlements $- - $(2) $(0.03) - - $(3) $(0.04)
CEO transition
costs - - - - - - (4) (0.04)
Write-down of
impaired
investments - - - - (1) (0.01) - -
Restructuring
initiatives:
- 2008 Global - - (5) (0.05) (1) (0.01) (5) (0.05)
- 2009 Global (19) (0.25) - - (64) (0.87) - -
- Altona,
Australia - - - - - - 18 0.20
- North America - - (1) (0.01) (2) (0.02) (14) (0.16)
- Europe (B) - - - - 1 0.01 (2) (0.02)
------------------------- -------------------------
Total certain
items (19) (0.25) (8) (0.09) (67) (0.90) (10) (0.11)
------------------------- -------------------------
- Discontinued
operations ( C ) - (0.01) - - - (0.01) - -
------------------------- -------------------------
Total certain
items and
discontinued
operations $(19) $(0.26) $(8) $(0.09) $(67) $(0.91) $(10) $(0.11)
------------------------- -------------------------
Tax impact of
certain items and
discontinued
operations 3 - 2 - 10 - 3 -
------------------------- -------------------------
Total certain
items and
discontinued
operations after
tax $(16) $(0.26) $(6) $(0.09) $(57) $(0.91) $(7) $(0.11)
------------------------- -------------------------
------------------------------------------------------------
Periods ended June 30 Three Months Nine Months
Dollars in millions (unaudited) 2009 2008 2009 2008
------------------------------------------------------------
Statement of Operations Line Item
---------------------------------
Cost of sales (18) $(4) (59) $(1)
Selling and administrative
expenses (1) (4) (6) (9)
Research & Development - - (2) -
------------------------
Total certain items $(19) $(8) $(67) $(10)
------------------------
NON-GAAP MEASURE:
-------------------------------------------------------------------------
Periods ended June 30 Three Months Nine Months
--------------------- ---------------------
Dollars in millions,
except per
share amounts
(unaudited) 2009 2008 2009 2008
per per per per
share(A) share(A) share(A) share(A)
-------------------------------------------------------------------------
Reconciliation of
Adjusted EPS to
GAAP EPS
-----------------
Total Diluted EPS $(0.20) $0.43 $(1.05) $1.16
Discontinued operations (0.01) - (0.01) -
----- --- ----- ---
Continuing operations $(0.19) $0.43 $(1.04) $1.16
Certain items (0.25) (0.09) (0.90) (0.11)
----- ----- ----- -----
Adjusted EPS $0.06 $0.52 $(0.14) $1.27
----- ----- ------ -----
(A) Per share amounts are calculated after tax.
(B) Benefit relates to former carbon black facilities.
( C ) Amounts relate to legal settlements in connection with our
discontinued operations
SOURCE:
CONTACT:
+1-617-342-6129, susannah_robinson@cabot-corp.com
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