Cabot's (CBT) Q4 Earnings Beat Estimates, Revenues Miss
Cabot Corporation CBT recorded a profit of $234 million or $4.10 per share in the fourth quarter of fiscal 2023 (ended Sep 30, 2023) compared with $94 million or $1.64 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) were $1.65 in the reported quarter, up from $1.55 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.47.
Net sales fell around 13.2% year over year to $965 million in the quarter. It missed the Zacks Consensus Estimate of $1,019.9 million.
Cabot Corporation Price, Consensus and EPS Surprise
Cabot Corporation price-consensus-eps-surprise-chart | Cabot Corporation Quote
Segment Highlights
Reinforcement Materials’ sales declined around 10.9% year over year to $624 million in the reported quarter. It missed the Zacks Consensus Estimate of $670 million. This decline is a result of reduced volumes in the Americas and EMEA, which were somewhat offset by increased volumes in Asia, particularly China. Earnings of this segment increased primarily due to higher unit margins from stronger pricing and product mix in the calendar year 2023 customer agreements.
Sales in the Performance Chemicals unit went down around 9.5% year over year to $306 million in the reported quarter. It missed the Zacks Consensus Estimate of $337 million. Earnings fell primarily due to lower unit margins from a less favorable product mix in the specialty carbons and fumed metal oxides product lines, as well as pricing pressures in the fumed metal oxides and battery materials product lines.
Fiscal 2023 Results
Cabot's net income for fiscal 2023 was $445 million or $7.73 per share compared with a profit of $209 million or $3.62 per share a year ago. The adjusted EPS for fiscal 2023 was $5.38.
Net sales fell around 9% year over year to $3,931 million in fiscal 2023.
Financial Position
The company had a cash balance of $238 million at the end of the fourth quarter of fiscal 2023. Cash flows from operating activities were $138 million in the fourth quarter of fiscal 2023. Capital expenditures totaled $78 million in the reported quarter. During the fourth quarter, cash was used for dividend payments of $23 million and share repurchases of $50 million.
Outlook
Cabot expects the challenging macroeconomic situation to continue in fiscal 2024, particularly in the near term. Despite the challenging environment, the company expects adjusted EPS in the range of $6.30-$6.80 in fiscal 2024, led by sustained growth in the Reinforcement Materials unit. Furthermore, assuming stable feedstock prices, the company projects solid operating cash flow driven by strong EBITDA.
Price Performance
Shares of Cabot have lost 13.4% in the past year compared with a 9% decline of the industry.
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Zacks Rank & Key Picks
Cabot currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Koppers Holdings Inc. KOP and The Andersons Inc. ANDE.
Equinox has a projected earnings growth rate of 90% for the current year. It currently carries a Zacks Rank #2 (Buy). Equinox has a trailing four-quarter earnings surprise of roughly 18.1%, on average. The stock is up around 58.7% in a year. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Koppers has a projected earnings growth rate of 7.5% for the current year. It currently carries a Zacks Rank #2. Koppers has a trailing four-quarter earnings surprise of roughly 21.7%, on average. The stock is up around 32% in a year.
Andersons currently sports a Zacks Rank #1. The stock has gained roughly 39.5% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
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