Cabot Corp Reports First Quarter Adjusted EPS of $0.86 and Diluted EPS of $1.23
Volume improvements drove 30% increase in year over year adjusted EPS
Key Highlights
- Double-digit year over year volume growth in Reinforcement Materials and Performance Materials
- Strong quarter for Advanced Technologies
- Completion of NHUMO acquisition strengthens leadership position in carbon black
-
Commercialization of new
China carbon black plant progressing well
(In millions, except per share amounts) | First Quarter | ||||||||||
2014 |
2013 |
||||||||||
Net sales | $ | 899 | $ | 820 | |||||||
Net income attributable to Cabot Corporation | $ | 80 | $ | 20 | |||||||
Net earnings per share attributable to Cabot Corporation | $ | 1.23 | $ | 0.31 | |||||||
Less Adjustments: | |||||||||||
Net loss per share from discontinued operations | $ | - | $ | (0.02) | |||||||
Certain items per share | $ | 0.37 | $ | (0.33) | |||||||
Adjusted EPS | $ | 0.86 | $ | 0.66 | |||||||
Commenting on the results, Cabot President and CEO
Financial Detail
For the first
quarter of fiscal 2014, net income attributable to
Segment Results
Reinforcement Materials -- First
quarter fiscal 2014 EBIT in Reinforcement Materials increased by
Global and regional volume changes for Reinforcement Materials for the first quarter of fiscal 2014 as compared to the same quarter of the prior year and the fourth quarter of fiscal 2013 are included in the table below:
First Quarter | First Quarter | |||||||||
Year over Year Change |
Sequential Change |
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Global, including NHUMO | 15% | 7% | ||||||||
Global, excluding NHUMO | 10% | 2% | ||||||||
Japan | 7% | (5%) | ||||||||
Southeast Asia | 4% | - | ||||||||
China | 9% | 7% | ||||||||
Europe, Middle East, Africa | 15% | 1% | ||||||||
North America | 7% | 2% | ||||||||
South America | 16% | (1%) | ||||||||
*Regional volumes exclude NHUMO sales. |
||||||||||
Performance Materials -- First quarter fiscal 2014 EBIT in
Performance Materials increased by
Advanced Technologies -- Advanced Technologies EBIT increased by
Purification Solutions -- For the first quarter of fiscal 2014,
Purification Solutions EBIT decreased by
Cash Performance -- The Company ended the first quarter of fiscal
2014 with a cash balance of
Taxes -- During the first quarter of fiscal 2014, the Company
recorded a net tax provision of
Outlook
“We are increasingly
optimistic about fiscal 2014 after seeing the recent positive demand
trends in our Reinforcement Materials and Performance Materials
segments,” Prevost said, commenting on the outlook for the Company. “We
expect tire and automotive industry demand to improve in 2014 along with
infrastructure-related spending, albeit at a modest pace. In our
Specialty Fluids business, the longer-term pipeline of projects remains
strong, however, in the coming months, we expect to see a lower level of
activity as compared to recent quarters. In the Purification Solutions
segment, we are focused on improving our operational performance to
restore profitability and preparing for growth in the North American
market. Overall, we remain focused on executing our strategy and we are
confident in our ability to deliver earnings growth to our shareholders.”
Earnings Call
The Company will
host a conference call with industry analysts at
About
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 actions that will drive
earnings growth, demand for our products, and expectations for growth
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.
Forward-looking statements are based on our current expectations,
assumptions, estimates and projections about Cabot's businesses and
strategies, market trends and conditions, economic conditions and other
factors. These statements are not guarantees of future performance and
are subject to risks, uncertainties, potentially inaccurate assumptions,
and other factors, some of which are beyond our control and difficult to
predict. If known or unknown risks materialize, or should underlying
assumptions prove inaccurate, our actual results could differ materially
from past results and from those expressed in the forward-looking
statement. Important factors that could cause our results to differ
materially from those expressed in the forward-looking statements
include, but are not limited to lower than expected demand for our
products; the loss of one or more of our important customers; our
inability to complete capacity expansions or other development projects,
including at our mine in
Explanation of Terms Used and Use of Non-GAAP Financial Measures -- The preceding discussion of our results and the accompanying financial tables report adjusted EPS, total segment earnings before interest and taxes, “Total Segment EBIT”, operating tax rate and adjusted EBITDA, which are non-GAAP financial measures. Our chief operating decision-maker uses these non-GAAP financial measures to evaluate the performance of the Company in terms of profitability. We believe that these measures also assist our investors in evaluating the changes in our results and the Company's performance.
In calculating adjusted EPS, we exclude from our net income per share from continuing operations certain items of expense and income that management does not consider representative of the Company's ongoing operations. Adjusted EPS should be considered as supplemental to, and not as a replacement for, EPS determined in accordance with GAAP. A reconciliation of adjusted EPS to EPS from continuing operations, the most directly comparable GAAP financial measure, and the certain items that are excluded from our calculation of adjusted EPS, are provided in the table titled "Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate.”
Total Segment EBIT is a non-GAAP performance measure, and should not be considered an alternative for Income (loss) from continuing operations before taxes, the most directly comparable GAAP financial measure. In calculating Total Segment EBIT, we exclude “certain items”, meaning items that management does not consider representative of our fundamental segment results, as well as items that are not allocated to our business segments, such as interest expense and other corporate costs. Our Chief Operating Decision Maker uses segment EBIT to evaluate the operating results of each segment and to allocate resources to the segments. We believe that this non-GAAP measure provides useful supplemental information for our investors as it is an important indicator of the Company’s operational strength and performance. Investors should consider the limitations associated with this non-GAAP measure, including the potential lack of comparability of this measure from one company to another. A reconciliation of Total Segment EBIT to Income (loss) from continuing operations before income taxes and equity in net earnings of affiliate companies is provided in the table titled, “Summary Results by Segments.”
The term “operating tax rate” is a non-GAAP financial measure and represents the tax rate on our recurring operating results. This rate excludes discrete tax items, which are unusual or infrequent items that are excluded from the estimated annual effective tax rate and other tax items, including the impact of the timing of losses in certain jurisdictions, cumulative rate adjustment and the impact of certain items on both operating income and tax provision. A reconciliation of operating tax rate to effective tax rate , the most directly comparable GAAP financial measure is provided in the table titled "Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate.”
“Adjusted EBITDA” is a non-GAAP financial measure and refers to earnings before interest, taxes, depreciation and amortization, excluding items that management does not consider representative of the fundamental segment results. A reconciliation of Adjusted EBITDA from segment EBIT for the first quarter of 2014 is provided on the investor portion of our website at http://investor.cabot-corp.com, under the Non-GAAP Reconciliations section.
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
Periods ended December 31 | Three Months | ||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2013 | 2012 | |||||||||||
Net sales and other operating revenues | $ | 899 | $ | 820 | |||||||||
Cost of sales | 720 | 673 | |||||||||||
Gross profit | 179 | 147 | |||||||||||
Selling and administrative expenses | 77 | 73 | |||||||||||
Research and technical expenses | 16 | 19 | |||||||||||
Income from operations | 86 | 55 | |||||||||||
Other income (expense) | |||||||||||||
Interest and dividend income | 1 | 1 | |||||||||||
Interest expense | (14 | ) | (16 | ) | |||||||||
Other income (A) | 35 | 1 | |||||||||||
Total other income (expense) | 22 | (14 | ) | ||||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
108 | 41 | |||||||||||
Provision for income taxes | (24 | ) | (19 | ) | |||||||||
Equity in earnings of affiliated companies | 2 | 3 | |||||||||||
Income from continuing operations | 86 | 25 | |||||||||||
Loss from discontinued operations, net of tax (B) | - | (1 | ) | ||||||||||
Net income | 86 | 24 | |||||||||||
Net income attributable to noncontrolling interests | 6 | 4 | |||||||||||
Net income attributable to Cabot Corporation | $ | 80 | $ | 20 | |||||||||
Diluted earnings per share of common stock attributable to Cabot Corporation |
|||||||||||||
Continuing operations | $ | 1.23 | $ | 0.33 | |||||||||
Discontinued operations (B) | - | (0.02 | ) | ||||||||||
Net income attributable to Cabot Corporation | $ | 1.23 | $ | 0.31 | |||||||||
Weighted average common shares outstanding | |||||||||||||
Diluted | 64.8 | 64.1 | |||||||||||
(A) Included in the FY 2014 results is
(B) Amounts relate primarily to the divesture of the Supermetals Business.
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS | |||||||||||||
Periods ended December 31 | Three Months | ||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2013 | 2012 | |||||||||||
Sales | |||||||||||||
Reinforcement Materials | $ | 517 | $ | 475 | |||||||||
Performance Materials | 217 | 196 | |||||||||||
Specialty Carbons and Compounds | 148 | 132 | |||||||||||
Fumed Metal Oxides | 69 | 64 | |||||||||||
Advanced Technologies | 65 | 38 | |||||||||||
Inkjet Colorants | 15 | 16 | |||||||||||
Aerogel | 5 | 5 | |||||||||||
Security Materials | 1 | 1 | |||||||||||
Elastomer Composites | 16 | 8 | |||||||||||
Specialty Fluids | 28 | 8 | |||||||||||
Purification Solutions | 77 | 93 | |||||||||||
Segment sales | 876 | 802 | |||||||||||
Unallocated and other (A) | 23 | 18 | |||||||||||
Net sales and other operating revenues | $ | 899 | $ | 820 | |||||||||
Segment Earnings Before Interest and Taxes (B) (C) | |||||||||||||
Reinforcement Materials | $ | 64 | $ | 50 | |||||||||
Performance Materials | 34 | 27 | |||||||||||
Advanced Technologies | 24 | 7 | |||||||||||
Purification Solutions | (9 | ) | 5 | ||||||||||
Total Segment Earnings Before Interest and Taxes (C) | 113 | 89 | |||||||||||
Unallocated and Other | |||||||||||||
Interest expense | (14 | ) | (16 | ) | |||||||||
Certain items (D) | 24 | (20 | ) | ||||||||||
Unallocated corporate costs (C) | (13 | ) | (12 | ) | |||||||||
General unallocated income (E) | - | 3 | |||||||||||
Less: Equity in earnings of affiliated companies | (2 | ) | (3 | ) | |||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
108 | 41 | |||||||||||
Provision for income taxes (including tax certain items) | (24 | ) | (19 | ) | |||||||||
Equity in earnings of affiliated companies | 2 | 3 | |||||||||||
Income from continuing operations | 86 | 25 | |||||||||||
Loss from discontinued operations, net of tax (F) | - | (1 | ) | ||||||||||
Net income | 86 | 24 | |||||||||||
Net income attributable to noncontrolling interests | 6 | 4 | |||||||||||
Net income attributable to Cabot Corporation | $ | 80 | $ | 20 | |||||||||
Diluted earnings per share of common stock | |||||||||||||
attributable to Cabot Corporation | |||||||||||||
Continuing operations | $ | 1.23 | $ | 0.33 | |||||||||
Discontinued operations (F) | - | (0.02 | ) | ||||||||||
Net income attributable to Cabot Corporation | $ | 1.23 | $ | 0.31 | |||||||||
Adjusted earnings per share | |||||||||||||
Adjusted EPS (G) | $ | 0.86 | $ | 0.66 | |||||||||
Weighted average common shares outstanding | |||||||||||||
Diluted | 64.8 | 64.1 | |||||||||||
(A) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, the impact of unearned revenue and the removal of 100% of the sales of an equity method affiliate.
(B) Segment EBIT is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in earnings of affiliated companies, royalty income, and allocated corporate costs.
(C) Fiscal 2013 Segment EBIT and General unallocated (expense) income have been recast from the reporting of the first quarter of fiscal 2013 to reflect an allocation of costs to the Purification Solutions segment for corporate administrative and functional support. These allocations were previously reflected in Unallocated corporate costs and other segment results. The recast results for each quarter of fiscal 2013 are consistent with those that were presented in conjunction with Cabot's year end fiscal 2013 earnings release.
(D) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(E) General unallocated income includes foreign currency transaction gains (losses), interest income, dividend income, the profit related to unearned revenue, and the impact of LIFO accounting.
(F) Amounts relate primarily to the divesture of the Supermetals business.
(G) Adjusted EPS is a non-GAAP measure, and a reconciliation of Adjusted EPS to GAAP EPS is presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||
December 31, | September 30, | |||||||||||
2013 | 2013 | |||||||||||
Dollars in millions | (unaudited) | (audited) | ||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 105 | $ | 95 | ||||||||
Accounts and notes receivable, net of reserve for doubtful accounts of $12 and $8 | 696 | 634 | ||||||||||
Inventories: | ||||||||||||
Raw materials | 128 | 102 | ||||||||||
Work in process | 2 | 2 | ||||||||||
Finished goods | 339 | 310 | ||||||||||
Other | 44 | 44 | ||||||||||
Total inventories | 513 | 458 | ||||||||||
Prepaid expenses and other current assets | 65 | 58 | ||||||||||
Notes receivable from sale of business | 215 | 214 | ||||||||||
Deferred income taxes | 21 | 36 | ||||||||||
Total current assets | 1,615 | 1,495 | ||||||||||
Property, plant and equipment, net | 1,641 | 1,605 | ||||||||||
Goodwill | 559 | 504 | ||||||||||
Equity affiliates | 78 | 119 | ||||||||||
Intangible assets, net of accumulated amortization of $22 and $18 | 364 | 310 | ||||||||||
Assets held for rent | 53 | 49 | ||||||||||
Deferred income taxes | 62 | 68 | ||||||||||
Other assets | 83 | 83 | ||||||||||
Total assets | $ | 4,455 | $ | 4,233 | ||||||||
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||||
December 31, | September 30, | |||||||||||||
2013 | 2013 | |||||||||||||
Dollars in millions, except share and per share amounts | (unaudited) | (audited) | ||||||||||||
Current liabilities: | ||||||||||||||
Notes payable | $ | 421 | $ | 264 | ||||||||||
Accounts payable and accrued liabilities | 487 | 534 | ||||||||||||
Income taxes payable | 38 | 30 | ||||||||||||
Deferred income taxes | 4 | 2 | ||||||||||||
Current portion of long-term debt | 19 | 14 | ||||||||||||
Total current liabilities | 969 | 844 | ||||||||||||
Long-term debt | 1,026 | 1,020 | ||||||||||||
Deferred income taxes | 32 | 21 | ||||||||||||
Other liabilities | 264 | 265 | ||||||||||||
Redeemable preferred stock | 28 | - | ||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock: | ||||||||||||||
Authorized: 2,000,000 shares of $1 par value | ||||||||||||||
Issued and Outstanding: None and none | - | - | ||||||||||||
Common stock: | ||||||||||||||
Authorized: 200,000,000 shares of $1 par value | ||||||||||||||
Issued: 64,612,793 and 64,223,985 shares | ||||||||||||||
Outstanding: 64,360,252 and 63,970,502 shares | 65 | 64 | ||||||||||||
Less cost of 252,541 and 253,483 shares of common treasury stock | (8 | ) | (8 | ) | ||||||||||
Additional paid-in capital | 43 | 39 | ||||||||||||
Retained earnings | 1,822 | 1,755 | ||||||||||||
Deferred employee benefits | - | (2 | ) | |||||||||||
Accumulated other comprehensive income | 83 | 103 | ||||||||||||
Total Cabot Corporation stockholders' equity | 2,005 | 1,951 | ||||||||||||
Noncontrolling interests | 131 | 132 | ||||||||||||
Total stockholders' equity | 2,136 | 2,083 | ||||||||||||
Total liabilities and stockholders' equity | $ | 4,455 | $ | 4,233 | ||||||||||
CABOT CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal 2013 | Fiscal 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions, | |||||||||||||||||||||||||||||||||||||||||||||||||||
except per share amounts (unaudited) | Dec. Q. | Mar. Q. | June Q. | Sept. Q. | FY | Dec. Q. | Mar. Q. | June Q. | Sept. Q. | FY | |||||||||||||||||||||||||||||||||||||||||
Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reinforcement Materials | 475 | 459 | 486 | 482 | 1,902 | 517 | - | - | - | 517 | |||||||||||||||||||||||||||||||||||||||||
Performance Materials | 196 | 243 | 233 | 232 | 904 | 217 | - | - | - | 217 | |||||||||||||||||||||||||||||||||||||||||
Specialty Carbons and Compounds | 132 | 173 | 159 | 158 | 622 | 148 | - | - | - | 148 | |||||||||||||||||||||||||||||||||||||||||
Fumed Metal Oxides | 64 | 70 | 74 | 74 | 282 | 69 | - | - | - | 69 | |||||||||||||||||||||||||||||||||||||||||
Advanced Technologies | 38 | 41 | 69 | 74 | 222 | 65 | - | - | - | 65 | |||||||||||||||||||||||||||||||||||||||||
Inkjet Colorants | 16 | 12 | 18 | 18 | 64 | 15 | - | - | - | 15 | |||||||||||||||||||||||||||||||||||||||||
Aerogel | 5 | 3 | 9 | 4 | 21 | 5 | - | - | - | 5 | |||||||||||||||||||||||||||||||||||||||||
Security Materials | 1 | 2 | 2 | 2 | 7 | 1 | - | - | - | 1 | |||||||||||||||||||||||||||||||||||||||||
Elastomer Composites | 8 | 4 | 5 | 12 | 29 | 16 | - | - | - | 16 | |||||||||||||||||||||||||||||||||||||||||
Specialty Fluids | 8 | 20 | 35 | 38 | 101 | 28 | - | - | - | 28 | |||||||||||||||||||||||||||||||||||||||||
Purification Solutions | 93 | 79 | 86 | 90 | 348 | 77 | - | - | - | 77 | |||||||||||||||||||||||||||||||||||||||||
Segment Sales | 802 | 822 | 874 | 878 | 3,376 | 876 | - | - | - | 876 | |||||||||||||||||||||||||||||||||||||||||
Unallocated and other (A) | 18 | 20 | 29 | 20 | 87 | 23 | - | - | - | 23 | |||||||||||||||||||||||||||||||||||||||||
Net sales and other operating revenues | $ | 820 | $ | 842 | $ | 903 | $ | 898 | $ | 3,463 | $ | 899 | $ | - | $ | - | $ | - | $ | 899 | |||||||||||||||||||||||||||||||
Segment Earnings Before Interest and Taxes (B) (C) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reinforcement Materials | 50 | 42 | 49 | 47 | 188 | 64 | - | - | - | 64 | |||||||||||||||||||||||||||||||||||||||||
Performance Materials | 27 | 37 | 35 | 33 | 132 | 34 | - | - | - | 34 | |||||||||||||||||||||||||||||||||||||||||
Advanced Technologies | 7 | 8 | 27 | 26 | 68 | 24 | - | - | - | 24 | |||||||||||||||||||||||||||||||||||||||||
Purification Solutions | 5 | - | (1 | ) | (8 | ) | (4 | ) | (9 | ) | - | - | - | (9 | ) | ||||||||||||||||||||||||||||||||||||
Total Segment Earnings Before Interest and Taxes (C) | 89 | 87 | 110 | 98 | 384 | 113 | - | - | - | 113 | |||||||||||||||||||||||||||||||||||||||||
Unallocated and Other | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (16 | ) | (16 | ) | (15 | ) | (15 | ) | (62 | ) | (14 | ) | - | - | - | (14 | ) | ||||||||||||||||||||||||||||||||||
Certain items (D) | (20 | ) | (20 | ) | (4 | ) | (12 | ) | (56 | ) | 24 | - | - | - | 24 | ||||||||||||||||||||||||||||||||||||
Unallocated corporate costs (C) | (12 | ) | (14 | ) | (12 | ) | (11 | ) | (49 | ) | (13 | ) | - | - | - | (13 | ) | ||||||||||||||||||||||||||||||||||
General unallocated income (expense) (E) | 3 | 2 | (3 | ) | (3 | ) | (1 | ) | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
Less: Equity in earnings of affiliated companies | (3 | ) | (3 | ) | (3 | ) | (2 | ) | (11 | ) | (2 | ) | - | - | - | (2 | ) | ||||||||||||||||||||||||||||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
41 | 36 | 73 | 55 | 205 | 108 | - | - | - | 108 | |||||||||||||||||||||||||||||||||||||||||
Provision for income taxes (including tax certain items) | (19 | ) | (16 | ) | (16 | ) | (7 | ) | (58 | ) | (24 | ) | - | - | - | (24 | ) | ||||||||||||||||||||||||||||||||||
Equity in earnings of affiliated companies | 3 | 3 | 3 | 2 | 11 | 2 | - | - | - | 2 | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | 25 | 23 | 60 | 50 | 158 | 86 | - | - | - | 86 | |||||||||||||||||||||||||||||||||||||||||
(Loss) income from discontinued operations, net of tax (F) | (1 | ) | - | 2 | 1 | 2 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Net income | 24 | 23 | 62 | 51 | 160 | 86 | - | - | - | 86 | |||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 4 | (4 | ) | 3 | 4 | 7 | 6 | - | - | 6 | |||||||||||||||||||||||||||||||||||||||||
Net income attributable to Cabot Corporation | $ | 20 | $ | 27 | $ | 59 | $ | 47 | $ | 153 | $ | 80 | $ | - | $ | - | $ | - | $ | 80 | |||||||||||||||||||||||||||||||
Diluted earnings per share of common stock attributable to Cabot Corporation |
|||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.33 | $ | 0.42 | $ | 0.86 | $ | 0.71 | $ | 2.32 | $ | 1.23 | $ | - | $ | - | $ | - | $ | 1.23 | |||||||||||||||||||||||||||||||
Discontinued operations (F) | (0.02 | ) | - | 0.04 | 0.02 | 0.04 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Net income attributable to Cabot Corporation | $ | 0.31 | $ | 0.42 | $ | 0.90 | $ | 0.73 | $ | 2.36 | $ | 1.23 | $ | - | $ | - | $ | - | $ | 1.23 | |||||||||||||||||||||||||||||||
Adjusted earnings per share | |||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EPS (G) | $ | 0.66 | $ | 0.63 | $ | 0.84 | $ | 0.78 | $ | 2.91 | $ | 0.86 | $ | - | $ | - | $ | - | $ | 0.86 | |||||||||||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted | 64.1 | 64.4 | 64.5 | 64.7 | 64.5 | 64.8 | - | - | - | 64.8 | |||||||||||||||||||||||||||||||||||||||||
(A) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, the impact of unearned revenue and the removal of 100% of the sales of an equity method affiliate.
(B) Segment EBIT is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in earnings of affiliated companies, royalty income, and allocated corporate costs.
(C) The first three quarters of fiscal 2013 Segment EBIT and General unallocated income (expense) have been recast to reflect an allocation of costs to the Purification Solutions segment for corporate administrative and functional support. These allocations were previously reflected in Unallocated corporate costs and other segment results. The recast results for each quarter of fiscal 2013 are consistent with those that were presented in conjunction with Cabot's year end fiscal 2013 earnings release.
(D) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(E) General unallocated income (expense) includes foreign currency transaction gains (losses), interest income, dividend income, the profit related to unearned revenue, and the impact of LIFO accounting.
(F) Amounts relate primarily to the divesture of the Supermetals business.
(G) Adjusted EPS is a non-GAAP measure, and a reconciliation of Adjusted EPS to GAAP EPS is presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND OPERATING TAX RATE | |||||||||||||||||||||||||||||||||||||||||||||||||
TABLE 1: DETAIL OF CERTAIN ITEMS | |||||||||||||||||||||||||||||||||||||||||||||||||
Periods ended December 31 | Three Months | ||||||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions, except per share amounts (unaudited) | Dollars in Millions | Per Share After Tax | |||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | per share(A) | per share(A) | ||||||||||||||||||||||||||||||||||||||||||||||
Certain items before and after income taxes |
|||||||||||||||||||||||||||||||||||||||||||||||||
Global restructuring activities | $ | (5 | ) | $ | (6 | ) | $ | (0.05 | ) | $ | (0.06 | ) | |||||||||||||||||||||||||||||||||||||
Acquisition and integration-related charges | (5 | ) | (14 | ) | (0.05 | ) | (0.15 | ) | |||||||||||||||||||||||||||||||||||||||||
Foreign currency gain on revaluations | 6 | - | 0.06 | - | |||||||||||||||||||||||||||||||||||||||||||||
Gain on step-acquisition of Nhumo | 29 | - | 0.45 | - | |||||||||||||||||||||||||||||||||||||||||||||
Environmental and legal reserves | (1 | ) | - | (0.02 | ) | - | |||||||||||||||||||||||||||||||||||||||||||
Certain items before tax | 24 | (20 | ) | 0.39 | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||
Tax impact of certain items | 1 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Certain items after tax | 25 | (14 | ) | 0.39 | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||
Tax-related certain items | |||||||||||||||||||||||||||||||||||||||||||||||||
Tax impact of certain foreign exchange losses | - | (7 | ) | - | (0.11 | ) | |||||||||||||||||||||||||||||||||||||||||||
Discrete tax items |
(1 |
) |
- | (0.02 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total tax-related certain items |
(1 |
) |
(7 | ) | (0.02 | ) | (0.12 | ) | |||||||||||||||||||||||||||||||||||||||||
Total certain items after tax | 24 | (21 | ) | 0.37 | (0.33 | ) | |||||||||||||||||||||||||||||||||||||||||||
Discontinued operations after income taxes (B) | - | (1 | ) | - | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||
Total discontinued operations after tax | $ | - | $ | (1 | ) | $ | - | $ | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE ITEM | |||||||||||||||||||||||||||||||||||||||||||||||||
Periods ended December 31 | Three Months | ||||||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions, Pre-Tax (unaudited) | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||
Statement of Operations Line Item (C) |
|||||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | $ | (8 | ) | $ | (14 | ) | |||||||||||||||||||||||||||||||||||||||||||
Selling and administrative expenses | (3 | ) | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Research and technical expenses | - | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Other income | 35 | - | |||||||||||||||||||||||||||||||||||||||||||||||
Total certain items | $ | 24 | $ | (20 | ) | ||||||||||||||||||||||||||||||||||||||||||||
TABLE 3: RECONCILIATION OF TAX CERTAIN ITEMS | |||||||||||||||||||||||||||||||||||||||||||||||||
Periods ended December 31 | Three Months | ||||||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Provision for income taxes, excluding certain items, to Provision for income taxes |
|||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | $ | (24 | ) | $ | (19 | ) | |||||||||||||||||||||||||||||||||||||||||||
Less: Tax impact of certain items | 1 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Tax related certain items |
(1 |
) |
(7 | ) | |||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes, excluding certain items | $ |
(24 |
) | $ | (18 | ) | |||||||||||||||||||||||||||||||||||||||||||
TABLE 4: RECONCILIATION OF OPERATING TAX RATE | |||||||||||||||||||||||||||||||||||||||||||||||||
Periods ended December 31 | Three Months | ||||||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) |
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the effective tax rate to the operating tax rate |
|||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | $ | (24 | ) | $ | (19 | ) | |||||||||||||||||||||||||||||||||||||||||||
Effective tax rate | 22 | % | 47 | % | |||||||||||||||||||||||||||||||||||||||||||||
Impact of discrete tax items: | |||||||||||||||||||||||||||||||||||||||||||||||||
Unusual or infrequent items | (1 | %) | (17 | %) | |||||||||||||||||||||||||||||||||||||||||||||
Items related to uncertain tax positions | 1 | % | (1 | %) | |||||||||||||||||||||||||||||||||||||||||||||
Other discrete tax items | (1 | %) | (2 | %) | |||||||||||||||||||||||||||||||||||||||||||||
Impact of certain items | 7 | % | - | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating tax rate | 28 | % | 27 | % | |||||||||||||||||||||||||||||||||||||||||||||
TABLE 5: RECONCILIATION OF ADJUSTED EPS BY QUARTER FISCAL 2013 and FISCAL 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||
NON-GAAP MEASURE: | |||||||||||||||||||||||||||||||||||||||||||||||||
Periods ended (unaudited) | Fiscal 2013(A) | Fiscal 2014(A) | |||||||||||||||||||||||||||||||||||||||||||||||
Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2013 YTD | Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2014 YTD | ||||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EPS to GAAP EPS |
|||||||||||||||||||||||||||||||||||||||||||||||||
Net income per share attributable to Cabot Corporation | $ | 0.31 | $ | 0.42 | $ | 0.90 | $ | 0.73 | $ | 2.36 | $ | 1.23 | $ | - | $ | - | $ | - | $ | 1.23 | |||||||||||||||||||||||||||||
Less: Net (loss) income per share from discontinued operations(B) | (0.02 | ) | - | 0.04 | 0.02 | 0.04 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
Net income per share from continuing operations | $ | 0.33 | $ | 0.42 | $ | 0.86 | $ | 0.71 | $ | 2.32 | $ | 1.23 | $ | - | $ | - | $ | - | $ | 1.23 | |||||||||||||||||||||||||||||
Less: Certain items after tax | (0.33 | ) | (0.21 | ) | 0.02 | (0.07 | ) | (0.59 | ) | 0.37 | - | - | - | 0.37 | |||||||||||||||||||||||||||||||||||
Adjusted earnings per share | $ | 0.66 | $ | 0.63 | $ | 0.84 | $ | 0.78 | $ | 2.91 | $ | 0.86 | $ | - | $ | - | $ | - | $ | 0.86 | |||||||||||||||||||||||||||||
(A) Per share amounts are calculated after tax and, where applicable, noncontrolling interests, net of tax.
(B) Amounts relate primarily to the divesture of the Supermetals Business.
(C) This table indicates the line items where certain items are recorded in the table titled Cabot Corporation Consolidated Statements of Operations.
Source:
Investor Contact:
Cabot Corporation
Erica McLaughlin,
617-342-6090