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Cabot (CBT) Surpasses Earnings and Revenue Estimates in Q1

Cabot Corporation CBT recorded a profit of $60 million or $1.06 per share in the first quarter of fiscal 2021 (ended Dec 31, 2020) compared with a profit of $41 million or 70 cents per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share were $1.18 in the reported quarter, up from 69 cents in the year-ago quarter. The figure topped the Zacks Consensus Estimate of 87 cents.

Net sales increased 2.6% year over year to $746 million in the quarter. It beat the Zacks Consensus Estimate of $691.6 million. The company saw strength in volumes and strong unit margins in the Reinforcement Materials segment.

Cabot Corporation Price, Consensus and EPS Surprise

 

Cabot Corporation Price, Consensus and EPS Surprise

Cabot Corporation price-consensus-eps-surprise-chart | Cabot Corporation Quote

 

Segment Highlights

Reinforcement Materials’ sales fell 1.1% year over year to $375 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $88 million, up from $47 million in the year-ago quarter. The upside can be attributed to improved pricing and product mix in Asia and from Cabot’s calendar 2020 global customer agreements. Additionally, the segment witnessed lower costs and 1% higher volumes due to rise in demand in Europe and Americas.

Sales in the Performance Chemicals unit went up around 10.3% year over year to $267 million in the reported quarter. EBIT increased 31.7% year over year to $54 million mainly due to increased volumes and improved product mix in specialty carbons and compounds product lines, courtesy of higher sales in automotive applications.

Sales in Purification Solutions remained stable year over year at $59 million in the quarter. Loss for the segment was $2 million, same as prior year quarter. The decrease in fixed costs was offset by reduced mercury removal demand and increased costs owing to reduction of inventory levels.

Financial Position

Cabot had cash and cash equivalents of $147 million at the end of the fiscal first quarter, down around 15% year over year. The company’s long-term debt fell around 1% from the year-ago quarter’s figure to $1,085 million.

Cash flow from operating activities was $21 million for the quarter, down 80% year over year.

Outlook

Cabot stated that it expects near-term conditions to remain favorable while long term visibility is limited. It forecasts strength in demand in the second quarter with January levels higher than the prior year. It expects an increase in raw material and fixed costs sequentially and less customer inventory replenishment compared to the first quarter. On the basis of these factors, adjusted EPS is projected to be in the range of 90 cents to $1. The company expects that the pandemic resurgence or related factors will not have a significant disruption impact on the ongoing business environment.

Price Performance

Shares of Cabot are up 15% in the past year compared with 21% rise of the industry.

Zacks Rank & Other Key Picks

Cabot currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, BHP Group BHP and Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of 75.5% for the current fiscal. The company’s shares have surged around 132.4% in a year. It currently sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP has an expected earnings growth rate of 59.5% for the current fiscal. The company’s shares have gained around 34.6% in the past year. It currently flaunts a Zacks Rank #1.

Impala has an expected earnings growth rate of 189.4% for the current fiscal. The company’s shares have rallied around 50.9% in the past year. It currently sports a Zacks Rank #1.

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