Cabot Corp Reports Third Quarter Fiscal 2015 Results
Adjusted EPS of
Key Highlights
-
Purification Solutions asset impairment of
$482 million after-tax, postSupreme Court MATS ruling - Margin pressure in Reinforcement Materials and lower project activity in Specialty Fluids led to lower earnings year over year
- Record results for Performance Chemicals
- Solid cash flow from operations and repurchased 574,000 shares during the third fiscal quarter
(In millions, except per share amounts) | Fiscal 2015 | Fiscal 2014 | |||||||||||||||
Third | First | Third | First | ||||||||||||||
Quarter |
9 Months |
Quarter |
9 Months |
||||||||||||||
Net sales | $ | 694 | $ | 2,200 | $ | 940 | $ | 2,736 | |||||||||
Net (loss) income attributable to Cabot Corporation | $ | (445 | ) | $ | (374 | ) | $ | 52 | $ | 168 | |||||||
Net (loss) earnings per share attributable to Cabot Corporation | $ | (7.04 | ) | $ | (5.88 | ) | $ | 0.78 | $ | 2.55 | |||||||
Less adjustments: | |||||||||||||||||
Discontinued operations | $ | 0.01 | $ | 0.01 | $ | (0.01 | ) | $ | (0.03 | ) | |||||||
Certain items per share | $ | (7.69 | ) | $ | (7.86 | ) | $ | (0.09 | ) | $ | - | ||||||
Adjusted EPS | $ | 0.64 | $ | 1.97 | $ | 0.88 | $ | 2.58 | |||||||||
Commenting on the results, Cabot President and CEO
Financial Summary
For the third
quarter of fiscal 2015, the net loss attributable to
Segment Results
Reinforcement Materials -- Third
quarter fiscal 2015 EBIT in Reinforcement Materials decreased by
As indicated in the table below, during the third fiscal quarter Cabot
was successful in growing its share in
Rubber Blacks volume changes |
Third Quarter |
Third Quarter |
|||||||
Global | Flat | 7 | % | ||||||
Japan | 14 | % | 10 | % | |||||
Southeast Asia | 10 | % | (3 | %) | |||||
China | 3 | % | 28 | % | |||||
Europe, Middle East, Africa | 1 | % | (5 | %) | |||||
North America | (12 | %) | 1 | % | |||||
South America | (5 | %) | (2 | %) |
Performance Chemicals -- Third quarter fiscal 2015 EBIT in
Performance Chemicals increased by
Purification Solutions -- Third quarter fiscal 2015 EBIT in
Purification Solutions increased by
Specialty Fluids – Third quarter fiscal 2015 EBIT in Specialty
Fluids decreased by
Cash Performance -- The Company ended the third quarter of
fiscal 2015 with a cash balance of
Taxes -- During the third quarter of fiscal 2015, the Company
recorded a tax benefit of
Outlook
“Looking ahead, we
expect the markets for the Performance Chemicals segment to remain
strong in both specialty carbons and metal oxides. The outlook for
Reinforcement Materials is mixed,” Prevost continued, ”with
strengthening developed economies and sluggish emerging markets.
Although the recent
“In view of this current environment, the Company remains highly focused
on managing costs and cash flow.” Prevost stated, “ At this stage, we
have reduced fixed costs by
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 expectations relating to
demand for our products, future earnings, capital expenditures, working
capital, free cash flow generation, and uses of available cash are
forward-looking statements. 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 economic, competitive, legal,
governmental, and technological factors. These factors are discussed
more fully in the reports we file with the
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, adjusted EBITDA, and free cash flow, 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 (loss) 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 (loss) income 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 (loss) income from continuing operations before income taxes and equity in (loss) income 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 third quarter of fiscal year 2015 is provided on the investor portion of our website at http://investor.cabot-corp.com, under the Non-GAAP Reconciliations section.
“Free cash flow” is a non-GAAP financial measure and refers to total segment EBIT, less unallocated corporate expenses, less taxes paid, plus depreciation and amortization, plus the change in net working capital (defined as accounts receivable, inventory, accounts payable and accrued expenses), less capital expenditures. A reconciliation of free cash flow from total segment EBIT for the third quarter of fiscal year 2015 is provided on the investor portion of our website at http://investor.cabot-corp.com, under the Non-GAAP Reconciliations section.
The term “product mix” refers to the mix of types and grade of products sold or the mix of geographic regions where products are sold, and the positive or negative impact this has on the revenue or profitability of the business or segment.
Third Quarter Earnings Announcement, Fiscal 2015 | |||||||||||||||||||||||
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | |||||||||||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Net sales and other operating revenues | $ | 694 | $ | 940 | $ | 2,200 | $ | 2,736 | |||||||||||||||
Cost of sales | 544 | 756 | 1,754 | 2,197 | |||||||||||||||||||
Gross profit | 150 | 184 | 446 | 539 | |||||||||||||||||||
Selling and administrative expenses | 67 | 76 | 216 | 245 | |||||||||||||||||||
Research and technical expenses | 15 | 15 | 44 | 46 | |||||||||||||||||||
Income from operations | 68 | 93 | 186 | 248 | |||||||||||||||||||
Other (expense) income | |||||||||||||||||||||||
Interest and dividend income | 1 | 1 | 3 | 3 | |||||||||||||||||||
Interest expense | (13 | ) | (14 | ) | (40 | ) | (41 | ) | |||||||||||||||
Other (expense) income (A) | (3 | ) | - | (6 | ) | 27 | |||||||||||||||||
Long-lived assets impairment charge | (209 | ) | - | (209 | ) | - | |||||||||||||||||
Goodwill impairment charge | (353 | ) | - | (353 | ) | - | |||||||||||||||||
Total other (expense) | (577 | ) | (13 | ) | (605 | ) | (11 | ) | |||||||||||||||
(Loss) income from continuing operations before income taxes and equity in | |||||||||||||||||||||||
earnings (loss) of affiliated companies | (509 | ) | 80 | (419 | ) | 237 | |||||||||||||||||
Benefit (provision) for income taxes (B) | 64 | (20 | ) | 47 | (51 | ) | |||||||||||||||||
Equity in earnings (loss) of affiliated companies, net of tax | 1 | (2 | ) | 4 | (2 | ) | |||||||||||||||||
(Loss) income from continuing operations | (444 | ) | 58 | (368 | ) | 184 | |||||||||||||||||
Income (Loss) from discontinued operations, net of tax (C) | 1 | (1 | ) | 1 | (2 | ) | |||||||||||||||||
Net (loss) income | (443 | ) | 57 | (367 | ) | 182 | |||||||||||||||||
Net income attributable to noncontrolling interests | 2 | 5 | 7 | 14 | |||||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | (445 | ) | $ | 52 | $ | (374 | ) | $ | 168 | |||||||||||||
Diluted earnings per share of common stock | |||||||||||||||||||||||
attributable to Cabot Corporation | |||||||||||||||||||||||
Continuing operations | $ | (7.05 | ) | $ | 0.79 | $ | (5.89 | ) | $ | 2.58 | |||||||||||||
Discontinued operations (C) | 0.01 | (0.01 | ) | 0.01 | (0.03 | ) | |||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | (7.04 | ) | $ | 0.78 | $ | (5.88 | ) | $ | 2.55 | |||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Diluted (D) | 63.3 | 65.2 | 63.7 | 65.0 |
(A)Other (expense) income for the nine months of fiscal 2014
includes a
(B)Included within the provision for income taxes is a tax
benefit for the three and nine months ended
(C)Amounts relate primarily to the divestiture of the Security Materials business.
(D) The weighted average common shares outstanding for both
the three and nine months ended
Third Quarter Earnings Announcement, Fiscal 2015 | ||||||||||||||||||||||
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS | ||||||||||||||||||||||
Periods ended June 30 |
Three Months |
Nine Months | ||||||||||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Sales | ||||||||||||||||||||||
Reinforcement Materials (A) | $ | 351 | $ | 538 | $ | 1,169 | $ | 1,583 | ||||||||||||||
Performance Chemicals (A) | 234 | 262 | 700 | 763 | ||||||||||||||||||
Specialty Carbons and Formulations (A) | 159 | 182 | 478 | 531 | ||||||||||||||||||
Metal Oxides (A) | 75 | 80 | 222 | 232 | ||||||||||||||||||
Purification Solutions (B) | 72 | 78 | 219 | 230 | ||||||||||||||||||
Specialty Fluids (A) | 12 | 24 | 36 | 77 | ||||||||||||||||||
Segment sales | 669 | 902 | 2,124 | 2,653 | ||||||||||||||||||
Unallocated and other (B) (C) | 25 | 38 | 76 | 83 | ||||||||||||||||||
Net sales and other operating revenues | $ | 694 | $ | 940 | $ | 2,200 | $ | 2,736 | ||||||||||||||
Segment Earnings Before Interest and Taxes (D) | ||||||||||||||||||||||
Reinforcement Materials (A) | $ | 32 | $ | 62 | $ | 112 | $ | 200 | ||||||||||||||
Performance Chemicals (A) | 48 | 44 | 129 | 127 | ||||||||||||||||||
Purification Solutions | 3 | (7 | ) | 3 | (20 | ) | ||||||||||||||||
Specialty Fluids (A) | 3 | 10 | 8 | 32 | ||||||||||||||||||
Total Segment Earnings Before Interest and Taxes | 86 | 109 | 252 | 339 | ||||||||||||||||||
Unallocated and Other | ||||||||||||||||||||||
Interest expense | (13 | ) | (14 | ) | (40 | ) | (41 | ) | ||||||||||||||
Certain items (E) | (567 | ) | (7 | ) | (599 | ) | (19 | ) | ||||||||||||||
Unallocated corporate costs | (12 | ) | (14 | ) | (35 | ) | (43 | ) | ||||||||||||||
General unallocated income (expense) (F) | (2 | ) | 4 | 7 | (1 | ) | ||||||||||||||||
Less: Equity in (earnings) loss of affiliated companies | (1 | ) | 2 | (4 | ) | 2 | ||||||||||||||||
(Loss) income from continuing operations before income taxes and equity in | ||||||||||||||||||||||
earnings of affiliated companies | (509 | ) | 80 | (419 | ) | 237 | ||||||||||||||||
Benefit (provision) for income taxes (including tax certain items) | 64 | (20 | ) | 47 | (51 | ) | ||||||||||||||||
Equity in earnings (loss) of affiliated companies | 1 | (2 | ) | 4 | (2 | ) | ||||||||||||||||
(Loss) income from continuing operations | (444 | ) | 58 | (368 | ) | 184 | ||||||||||||||||
Income from discontinued operations, net of tax (G) | 1 | (1 | ) | 1 | (2 | ) | ||||||||||||||||
Net (loss) income | (443 | ) | 57 | (367 | ) | 182 | ||||||||||||||||
Net income attributable to noncontrolling interests | 2 | 5 | 7 | 14 | ||||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | (445 | ) | $ | 52 | $ | (374 | ) | $ | 168 | ||||||||||||
Diluted earnings per share of common stock | ||||||||||||||||||||||
attributable to Cabot Corporation | ||||||||||||||||||||||
Continuing operations | $ | (7.05 | ) | $ | 0.79 | $ | (5.89 | ) | $ | 2.58 | ||||||||||||
Discontinued operations (G) | 0.01 | (0.01 | ) | 0.01 | (0.03 | ) | ||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | (7.04 | ) | $ | 0.78 | $ | (5.88 | ) | $ | 2.55 | ||||||||||||
Adjusted earnings per share | ||||||||||||||||||||||
Adjusted EPS (H) | $ | 0.64 | $ | 0.88 | $ | 1.97 | $ | 2.58 | ||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||
Diluted (I) | 63.3 | 65.2 | 63.7 | 65.0 |
(A)The amounts above have been recast for all periods to reflect the movement of the Elastomer Composites product line from the Advanced Technologies segment to the Reinforcement Materials segment and the Inkjet Colorants and Aerogel product lines from the Advanced Technologies segment to the Performance Chemicals segment. Specialty Fluids, which was previously included in the Advanced Technologies segment, is now a stand-alone reporting segment.
(B)Beginning in the second quarter of fiscal 2014, a reclassification between Purification Solutions and Unallocated and other sales has been made in the table above in order to align the presentation of shipping and handling fees on customer sales with the rest of Cabot’s businesses. Historical periods have been adjusted to reflect this reclassification.
(C)Unallocated and other reflects royalties, other operating revenues, external shipping and handling fees, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain Notes receivable.
(D)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 (loss) of affiliated companies, royalty income, and allocated corporate costs.
(E)Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(F)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.
(G)Amounts relate primarily to the divestiture of the Security Materials business.
(H)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.
(I)The weighted average common shares outstanding for both
the three and nine months ended
Third Quarter Earnings Announcement, Fiscal 2015 | ||||||||||
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||
June 30, | September 30, | |||||||||
2015 | 2014 | |||||||||
Dollars in millions | (unaudited) | (audited) | ||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 84 | $ | 67 | ||||||
Accounts and notes receivable, net of reserve for doubtful accounts of $8 and $7 | 563 | 688 | ||||||||
Inventories: | ||||||||||
Raw materials | 88 | 111 | ||||||||
Work in process | 4 | 2 | ||||||||
Finished goods | 298 | 341 | ||||||||
Other | 42 | 44 | ||||||||
Total inventories | 432 | 498 | ||||||||
Prepaid expenses and other current assets | 60 | 69 | ||||||||
Deferred income taxes | 39 | 42 | ||||||||
Total current assets | 1,178 | 1,364 | ||||||||
Property, plant and equipment, net | 1,427 | 1,581 | ||||||||
Goodwill | 157 | 536 | ||||||||
Equity affiliates | 61 | 68 | ||||||||
Intangible assets, net of accumulated amortization of $5 and $33 | 159 | 347 | ||||||||
Assets held for rent | 68 | 56 | ||||||||
Deferred income taxes | 137 | 80 | ||||||||
Other assets | 49 | 52 | ||||||||
Total assets | $ | 3,236 | $ | 4,084 |
Third Quarter Earnings Announcement, Fiscal 2015 | ||||||||||||
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||
June 30, | September 30, | |||||||||||
2015 | 2014 | |||||||||||
Dollars in millions, except share and per share amounts | (unaudited) | (audited) | ||||||||||
Current liabilities: | ||||||||||||
Notes payable | $ | 152 | $ | 44 | ||||||||
Accounts payable and accrued liabilities | 387 | 512 | ||||||||||
Income taxes payable | 27 | 49 | ||||||||||
Deferred income taxes | 1 | 1 | ||||||||||
Current portion of long-term debt | 1 | 24 | ||||||||||
Total current liabilities | 568 | 630 | ||||||||||
Long-term debt | 971 | 1,004 | ||||||||||
Deferred income taxes | 52 | 68 | ||||||||||
Other liabilities | 249 | 291 | ||||||||||
Redeemable preferred stock | 28 | 27 | ||||||||||
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: 63,162,812 and 64,634,731 shares | ||||||||||||
Outstanding: 62,914,996 and 64,382,366 shares | 63 | 64 | ||||||||||
Less cost of 247,816 and 252,365 shares of common treasury stock | (8 | ) | (7 | ) | ||||||||
Additional paid-in capital | - | 49 | ||||||||||
Retained earnings | 1,464 | 1,900 | ||||||||||
Accumulated other comprehensive income | (255 | ) | (64 | ) | ||||||||
Total Cabot Corporation stockholders' equity | 1,264 | 1,942 | ||||||||||
Noncontrolling interests | 104 | 122 | ||||||||||
Total stockholders' equity | 1,368 | 2,064 | ||||||||||
Total liabilities and stockholders' equity | $ | 3,236 | $ | 4,084 |
CABOT CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | Fiscal 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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 (A) | $ | 533 | $ | 512 | $ | 538 | $ | 525 | $ | 2,108 | $ | 460 | $ | 358 | $ | 351 | $ | - | $ | 1,169 | ||||||||||||||||||||||||||||||||
Performance Chemicals (A) | 237 | 264 | 262 | 259 | 1,022 | 229 | 237 | 234 | - | 700 | ||||||||||||||||||||||||||||||||||||||||||
Specialty Carbons and Formulations (A) | 163 | 186 | 182 | 178 | 709 | 157 | 162 | 159 | - | 478 | ||||||||||||||||||||||||||||||||||||||||||
Metal Oxides (A) | 74 | 78 | 80 | 81 | 313 | 72 | 75 | 75 | - | 222 | ||||||||||||||||||||||||||||||||||||||||||
Purification Solutions | 72 | 80 | 78 | 85 | 315 | 76 | 71 | 72 | - | 219 | ||||||||||||||||||||||||||||||||||||||||||
Specialty Fluids (A) | 28 | 25 | 24 | 21 | 98 | 16 | 8 | 12 | - | 36 | ||||||||||||||||||||||||||||||||||||||||||
Segment Sales | 870 | 881 | 902 | 890 | 3,543 | 781 | 674 | 669 | - | 2,124 | ||||||||||||||||||||||||||||||||||||||||||
Unallocated and other (B) | 28 | 17 | 38 | 21 | 104 | 31 | 20 | 25 | - | 76 | ||||||||||||||||||||||||||||||||||||||||||
Net sales and other operating revenues | $ | 898 | $ | 898 | $ | 940 | $ | 911 | $ | 3,647 | $ | 812 | $ | 694 | $ | 694 | $ | - | $ | 2,200 | ||||||||||||||||||||||||||||||||
Segment Earnings Before Interest and Taxes (C) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinforcement Materials (A) | $ | 73 | $ | 65 | $ | 62 | $ | 59 | $ | 259 | $ | 53 | $ | 27 | $ | 32 | $ | - | $ | 112 | ||||||||||||||||||||||||||||||||
Performance Chemicals (A) | 37 | 46 | 44 | 41 | 168 | 39 | 42 | 48 | - | 129 | ||||||||||||||||||||||||||||||||||||||||||
Purification Solutions | (9 | ) | (4 | ) | (7 | ) | 1 | (19 | ) | (1 | ) | 1 | 3 | - | 3 | |||||||||||||||||||||||||||||||||||||
Specialty Fluids (A) | 13 | 9 | 10 | 7 | 39 | 6 | (1 | ) | 3 | - | 8 | |||||||||||||||||||||||||||||||||||||||||
Total Segment Earnings Before Interest and Taxes | 114 | 116 | 109 | 108 | 447 | 97 | 69 | 86 | - | 252 | ||||||||||||||||||||||||||||||||||||||||||
Unallocated and Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (14 | ) | (13 | ) | (14 | ) | (14 | ) | (55 | ) | (13 | ) | (14 | ) | (13 | ) | - | (40 | ) | |||||||||||||||||||||||||||||||||
Certain items (D) | 24 | (36 | ) | (7 | ) | (9 | ) | (28 | ) | (26 | ) | (6 | ) | (567 | ) | - | (599 | ) | ||||||||||||||||||||||||||||||||||
Unallocated corporate costs | (13 | ) | (16 | ) | (14 | ) | (11 | ) | (54 | ) | (12 | ) | (11 | ) | (12 | ) | - | (35 | ) | |||||||||||||||||||||||||||||||||
General unallocated (expense) income (E) | - | (5 | ) | 4 | (1 | ) | (2 | ) | 6 | 3 | (2 | ) | - | 7 | ||||||||||||||||||||||||||||||||||||||
Less: Equity in (earnings) loss of affiliated companies | (2 | ) | 2 | 2 | (2 | ) | - | (1 | ) | (2 | ) | (1 | ) | - | (4 | ) | ||||||||||||||||||||||||||||||||||||
(Loss) income from continuing operations before income taxes and | ||||||||||||||||||||||||||||||||||||||||||||||||||||
equity in earnings (loss) of affiliated companies | 109 | 48 | 80 | 71 | 308 | 51 | 39 | (509 | ) | - | (419 | ) | ||||||||||||||||||||||||||||||||||||||||
Benefit (provision) for income taxes (including tax certain items) | (24 | ) | (7 | ) | (20 | ) | (41 | ) | (92 | ) | (3 | ) | (14 | ) | 64 | - | 47 | |||||||||||||||||||||||||||||||||||
Equity in earnings (loss) of affiliated companies | 2 | (2 | ) | (2 | ) | 2 | - | 1 | 2 | 1 | - | 4 | ||||||||||||||||||||||||||||||||||||||||
(Loss) income from continuing operations | 87 | 39 | 58 | 32 | 216 | 49 | 27 | (444 | ) | - | (368 | ) | ||||||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax (F) | (1 | ) | - | (1 | ) | 4 | 2 | - | - | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||
Net (loss) income | 86 | 39 | 57 | 36 | 218 | 49 | 27 | (443 | ) | - | (367 | ) | ||||||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 6 | 3 | 5 | 5 | 19 | 4 | 1 | 2 | - | 7 | ||||||||||||||||||||||||||||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | 80 | $ | 36 | $ | 52 | $ | 31 | $ | 199 | $ | 45 | $ | 26 | $ | (445 | ) | $ | - | $ | (374 | ) | ||||||||||||||||||||||||||||||
Diluted earnings per share of common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
attributable to Cabot Corporation | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | $ | 1.24 | $ | 0.55 | $ | 0.79 | $ | 0.43 | $ | 3.01 | $ | 0.69 | $ | 0.41 | $ | (7.05 | ) | $ | - | $ | (5.89 | ) | ||||||||||||||||||||||||||||||
Discontinued operations (F) | (0.01 | ) | (0.01 | ) | (0.01 | ) | 0.05 | 0.02 | - | - | 0.01 | - | 0.01 | |||||||||||||||||||||||||||||||||||||||
Net (loss) income attributable to Cabot Corporation | $ | 1.23 | $ | 0.54 | $ | 0.78 | $ | 0.48 | $ | 3.03 | $ | 0.69 | $ | 0.41 | $ | (7.04 | ) | $ | - | $ | (5.88 | ) | ||||||||||||||||||||||||||||||
Adjusted earnings per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EPS (G) | $ | 0.87 | $ | 0.83 | $ | 0.88 | $ | 0.85 | $ | 3.43 | $ | 0.80 | $ | 0.53 | $ | 0.64 | $ | - | $ | 1.97 | ||||||||||||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted (H) | 64.8 | 65.1 | 65.2 | 65.1 | 65.1 | 64.6 | 63.0 | 63.3 | - | 63.7 |
(A)The amounts above have been recast for all periods to reflect the movement of the Elastomer Composites product line from the Advanced Technologies segment to the Reinforcement Materials segment and the Inkjet Colorants and Aerogel product lines from the Advanced Technologies segment to the Performance Chemicals segment. Specialty Fluids, which was previously included in the Advanced Technologies segment, is now a stand-alone reporting segment.
(B)Unallocated and other reflects royalties, other operating revenues, external shipping and handling fees, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain Notes receivable.
(C)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 (loss) of affiliated companies, royalty income, and allocated corporate costs.
(D)Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(E)General unallocated (expense) 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 divestiture of the Security Materials 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.
(H)The weighted average common shares outstanding for both
the three and nine months ended
Third Quarter Earnings Announcement, Fiscal 2015 | |||||||||||||||||||||||
CABOT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | |||||||||||||||||||||
Dollars in millions | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||||||||
Net (loss) income | $ | (443 | ) | $ | 57 | $ | (367 | ) | $ | 182 | |||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 48 | 50 | 140 | 150 | |||||||||||||||||||
Other non-cash charges (income), net |
492 |
(6 | ) |
507 |
(27 | ) | |||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||||
Changes in certain working capital items (A) | (12 | ) | 14 | 29 | (128 | ) | |||||||||||||||||
Changes in other assets and liabilities, net |
(15 |
) | - |
(41 |
) | (14 | ) | ||||||||||||||||
Cash dividends received from equity affiliates | 3 | 1 | 10 | 22 | |||||||||||||||||||
Cash provided by operating activities | 73 | 116 | 278 | 185 | |||||||||||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||||||||
Additions to property, plant and equipment | (33 | ) | (45 | ) | (103 | ) | (115 | ) | |||||||||||||||
Cash paid for acquisition of business, net of cash acquired of $7 million | - | - | - | (73 | ) | ||||||||||||||||||
Other investing activities, net | (1 | ) | 215 | (8 | ) | 210 | |||||||||||||||||
Cash (used in) provided by investing activities | (34 | ) | 170 | (111 | ) | 22 | |||||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||||||||
Change in debt, net | (7 | ) | (257 | ) | 51 | (136 | ) | ||||||||||||||||
Cash dividends paid to common stockholders | (14 | ) | (14 | ) | (42 | ) | (40 | ) | |||||||||||||||
Other financing activities, net | (28 | ) | (6 | ) | (95 | ) | (12 | ) | |||||||||||||||
Cash (used in) provided by financing activities | (49 | ) | (277 | ) | (86 | ) | (188 | ) | |||||||||||||||
Effect of exchange rates on cash | - | 3 | (64 | ) | (13 | ) | |||||||||||||||||
(Decrease) increase in cash and cash equivalents | (10 | ) | 12 | 17 | 6 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 94 | 89 | 67 | 95 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 84 | $ | 101 | $ | 84 | $ | 101 | |||||||||||||||
(A)Includes Accounts and notes receivable, Inventories, and Accounts payable and accrued liabilities | |||||||||||||||||||||||
Third Quarter Earnings Announcement, Fiscal 2015 | ||||||||||||||||||||||||||||||||||||||||||
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND OPERATING TAX RATE |
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|
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TABLE 1: DETAIL OF CERTAIN ITEMS | ||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||
Dollars in millions, except per share amounts (unaudited) | Dollars in Millions | Per Share After Tax | ||||||||||||||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | per share(A) | per share(A) | per share(A) | per share(A) | |||||||||||||||||||||||||||||||||||
Certain items before and after income taxes |
||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill and long-lived assets | $ | (563 | ) |
$ |
― |
$ | (563 | ) |
$ |
― |
$ | (7.58 | ) |
$ |
― |
|
$ | (7.53 | ) |
$ |
― |
|||||||||||||||||||||
Global restructuring activities | (2 | ) | (3 | ) | (14 | ) | (24 | ) | (0.03 | ) | (0.04 | ) | (0.16 | ) | (0.25 | ) | ||||||||||||||||||||||||||
Acquisition and integration-related charges | — | — | (2 | ) | (5 | ) | — | (0.03 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||
Employee benefit plan settlement | — | — | (18 | ) | — | — | (0.20 | ) |
— |
|||||||||||||||||||||||||||||||||
Foreign currency loss on revaluations | (2 | ) | (3 | ) | (2 | ) | (3 | ) | (0.02 | ) | (0.04 | ) | (0.02 | ) | (0.03 | ) | ||||||||||||||||||||||||||
Gain on existing investment in NHUMO | — | — | 29 | — | — | 0.45 | ||||||||||||||||||||||||||||||||||||
Legal and environmental matters and reserves | — | (1 | ) | (16 | ) | (0.01 | ) | — | (0.16 | ) | ||||||||||||||||||||||||||||||||
Total certain items, pre-tax | (567 | ) | (7 | ) | (599 | ) | (19 | ) | (7.63 | ) | (0.09 | ) | (7.94 | ) | (0.04 | ) | ||||||||||||||||||||||||||
Tax impact of certain items | 81 | 2 | 90 | 16 | ||||||||||||||||||||||||||||||||||||||
Certain items after tax | (486 | ) | (5 | ) | (509 | ) | (3 | ) | (7.63 | ) | (0.09 | ) | (7.94 | ) | (0.04 | ) | ||||||||||||||||||||||||||
Tax-related certain items | ||||||||||||||||||||||||||||||||||||||||||
Discrete tax items | (1 | ) | (1 | ) | 7 | 2 | (0.02 | ) | — | 0.11 | 0.04 | |||||||||||||||||||||||||||||||
Total tax-related certain items | (1 | ) | (1 | ) | 7 | 2 | (0.02 | ) | - | 0.11 | 0.04 | |||||||||||||||||||||||||||||||
Total certain items after tax | $ | (487 | ) | $ | (6 | ) | $ | (502 | ) | $ | (1 | ) | $ | (7.65 | ) | $ | (0.09 | ) | $ | (7.83 | ) | $ | - | |||||||||||||||||||
Discontinued operations after income taxes (B) | $ | 1 | $ | (1 | ) | $ | 1 | $ | (2 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.01 | $ | (0.03 | ) | ||||||||||||||||||||||
Total discontinued operations after tax | $ | 1 | $ | (1 | ) | $ | 1 | $ | (2 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.01 | $ | (0.03 | ) | ||||||||||||||||||||||
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE ITEM | ||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions, Pre-Tax (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||
Statement of Operations Line Item (C) |
||||||||||||||||||||||||||||||||||||||||||
Cost of sales | $ | (1 | ) | $ | (2 | ) | $ | (21 | ) | $ | (28 | ) | ||||||||||||||||||||||||||||||
Selling and administrative expenses | (1 | ) | (2 | ) | (13 | ) | (17 | ) | ||||||||||||||||||||||||||||||||||
Other (expense) income | (565 | ) | (3 | ) | (565 | ) | 26 | |||||||||||||||||||||||||||||||||||
Total certain items, pre-tax | $ | (567 | ) | $ | (7 | ) | $ | (599 | ) | $ | (19 | ) | ||||||||||||||||||||||||||||||
TABLE 3: RECONCILIATION OF TAX CERTAIN ITEMS | ||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||
Reconciliation of Provision for income taxes, excluding certain items, to Provision for income taxes | ||||||||||||||||||||||||||||||||||||||||||
Benefit (provision) for income taxes | $ | 64 | $ | (20 | ) | $ | 47 | $ | (51 | ) | ||||||||||||||||||||||||||||||||
Less: Tax impact of certain items | 81 | 2 | 90 | 16 | ||||||||||||||||||||||||||||||||||||||
Less: Tax-related certain items | (1 | ) | (1 | ) | 7 | 2 | ||||||||||||||||||||||||||||||||||||
Provision for income taxes, excluding certain items | $ | (16 | ) | $ | (21 | ) | $ | (50 | ) | $ | (69 | ) | ||||||||||||||||||||||||||||||
TABLE 4: RECONCILIATION OF OPERATING TAX RATE | ||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||
Reconciliation of the effective tax rate to the operating tax rate | ||||||||||||||||||||||||||||||||||||||||||
Benefit (provision) for income taxes | $ | 64 | $ | (20 | ) | $ | 47 | $ | (51 | ) | ||||||||||||||||||||||||||||||||
Effective tax rate | 13 | % | 25 | % | 11 | % | 22 | % | ||||||||||||||||||||||||||||||||||
Impact of discrete tax items: | ||||||||||||||||||||||||||||||||||||||||||
Unusual or infrequent items | - | % | (1 | %) | (1 | %) | (1 | %) | ||||||||||||||||||||||||||||||||||
Items related to uncertain tax positions | - | % | - | % | (2 | %) | 2 | % | ||||||||||||||||||||||||||||||||||
Other discrete tax items | - | % | 1 | % | 1 | % | (1 | %) | ||||||||||||||||||||||||||||||||||
Impact of certain items | 14 | % | 2 | % | 18 | % | 5 | % | ||||||||||||||||||||||||||||||||||
Operating tax rate | 27 | % | 27 | % | 27 | % | 27 | % | ||||||||||||||||||||||||||||||||||
TABLE 5: RECONCILIATION OF ADJUSTED EPS BY QUARTER FISCAL 2015 and FISCAL 2014 | ||||||||||||||||||||||||||||||||||||||||||
NON-GAAP MEASURE: | ||||||||||||||||||||||||||||||||||||||||||
Periods ended (unaudited) | Fiscal 2015(A) | |||||||||||||||||||||||||||||||||||||||||
Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2015 YTD | ||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EPS to GAAP EPS |
||||||||||||||||||||||||||||||||||||||||||
Net (loss) income per share attributable to Cabot Corporation | $ | 0.69 | $ | 0.41 | $ | (7.04 | ) |
$ |
― |
$ | (5.88 | ) | ||||||||||||||||||||||||||||||
Less: Net income per share from discontinued operations(B) | — | — | 0.01 |
— |
0.01 | |||||||||||||||||||||||||||||||||||||
Net income per share from continuing operations | $ | 0.69 | $ | 0.41 | $ | (7.05 | ) |
$ |
― |
$ | (5.89 | ) | ||||||||||||||||||||||||||||||
Less: Certain items after tax per share | (0.11 | ) | (0.12 | ) | (7.65 | ) | — | (7.83 | ) | |||||||||||||||||||||||||||||||||
Less: Dilutive impact of shares (D) | — |
— |
(0.04 | ) |
—
|
(0.03 | ) | |||||||||||||||||||||||||||||||||||
Adjusted earnings per share | $ | 0.80 | $ | 0.53 | $ | 0.64 |
$ |
― |
$ | 1.97 | ||||||||||||||||||||||||||||||||
Periods ended (unaudited) | Fiscal 2014(A) | |||||||||||||||||||||||||||||||||||||||||
Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2014 | ||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EPS to GAAP EPS | ||||||||||||||||||||||||||||||||||||||||||
Net income per share attributable to Cabot Corporation | $ | 1.23 | $ | 0.54 | $ | 0.78 | $ | 0.48 | $ | 3.03 | ||||||||||||||||||||||||||||||||
Less: Net (loss) income per share from discontinued operations(B) | (0.01 | ) | (0.01 | ) | (0.01 | ) | 0.05 | 0.02 | ||||||||||||||||||||||||||||||||||
Net income per share from continuing operations | $ | 1.24 | $ | 0.55 | $ | 0.79 | $ | 0.43 | $ | 3.01 | ||||||||||||||||||||||||||||||||
Less: Certain items after tax per share | 0.37 | (0.28 | ) | (0.09 | ) | (0.42 | ) | (0.42 | ) | |||||||||||||||||||||||||||||||||
Adjusted earnings per share | $ | 0.87 | $ | 0.83 | $ | 0.88 | $ | 0.85 | $ | 3.43 | ||||||||||||||||||||||||||||||||
(A) | Per share amounts are calculated after tax and, where applicable, noncontrolling interest, net of tax. | |||||||||||||||||||||||||||||||||||||||||
(B) | Amounts relate primarily to the divestiture of the Security Materials business. | |||||||||||||||||||||||||||||||||||||||||
(C) | This table indicates the line items where certain items are recorded in the table titled Cabot Corporation Consolidated Statements of Operations. | |||||||||||||||||||||||||||||||||||||||||
(D) | Due to the Company’s Net Loss position, GAAP EPS has been calculated using basic weighted average shares for both basic and diluted GAAP EPS. However, in order to provide an Adjusted Non-GAAP EPS with a weighted average share figure that is consistent with all other periods presented, the Company has included this reconciling item to quantify the difference between basic and diluted weighted average shares. The net loss in Q3 2015 is driven by a Certain Item, so the Company believes this approach provides the most comparable presentation possible. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804005535/en/
Source:
Cabot Corporation
Investor Contact:
Jim Kelly, 617-342-6020