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Why Is Cabot (CBT) Down 4.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Cabot (CBT). Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cabot Misses Q4 Earnings, Tops Revenue Estimates

Cabot recorded net profit of $94 million or $1.51 per share in the fourth quarter of fiscal 2018 (ended Sep 30, 2018), up from net profit of $72 million or $1.13 in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) in the reported quarter were $1.00 (up from 98 cents in the year-ago quarter), which missed the Zacks Consensus Estimate of $1.09.

Net sales increased around 17.6% year over year to $850 million in the quarter. The figure outpaced the Zacks Consensus Estimate of $846 million.

Adjusted earnings in fiscal 2018 rose 13.8% year over year to $4.03 per share and net sales increased 19.3% year over year to $3,242 million.

According to Cabot, record financial performance in fiscal 2018 demonstrates its commitment and successful execution of corporate strategy across the globe.

Segment Highlights

Reinforcement Materials sales increased 27.2% year over year to $467 million in the fiscal fourth quarter. EBIT in the segment jumped 33%, driven by the impact of 2018 customer agreements as well as stronger spot pricing and higher volumes in Asia.

Sales at Performance Chemicals rose almost 4.5% year over year to $257 million in the quarter. EBIT declined 27.3% due to higher costs associated with partner driven plant turnarounds in fumed silica network along with spending on advantaged growth investments.

Sales at the Purification Solutions edged down to $73 million from $74 million in the year-ago quarter, while the same for the Specialty Fluids segment rose 90.9% year over year to $21 million.
Financial Position

As of Sep 30, Cabot had cash and cash equivalents of $175 million, down from $280 million in the year-ago quarter. The company’s long-term debt contracted 8.8% year over year to $719 million.

Cash provided by operating activities was around $163 million in the reported quarter.


Cabot expects adjusted EPS for fiscal 2019 in the range of $4.35 to $4.75.

Per the company, Reinforcement Materials division is expected to benefit from positive 2019 customer agreements and its strong market position in Asia. The Performance Chemicals unit is expected to return to a more normalized EBIT run-rate after the large turnarounds in the fiscal fourth quarter.  It also expects benefits from recent growth investments to materialize. The Purification Solutions segment is expected to gain from a targeted improvement plan that is currently under process. The Specialty Fluids unit is expected to continue its recent strong performance into fiscal 2019.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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