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Cabot's (CBT) Earnings and Revenues Outshine Estimates in Q1
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Cabot Corporation (CBT - Free Report) recorded first-quarter fiscal 2023 (ending Dec 31, 2022) earnings of 93 cents per share against the year-ago quarter's loss of $1.57.
CBT posted adjusted earnings of 98 cents per share, down 24% from the year-ago quarter figure of $1.29. It surpassed the Zacks Consensus Estimate of 96 cents.
The company’s net sales in the first quarter were $965 million, which beat the Zacks Consensus Estimate of $868.5 million. Net sales decreased around 0.3% from $968 million reported in the prior-year quarter.
CBT’s performance in the first quarter was significantly impacted by lower volumes on account of consumer destocking, restrictions relating to COVID in China and weak demand in its Performance Chemicals segment. Unfavorable movements in currency and higher interest expenses also affected the company’s performance in the first quarter.
Cabot Corporation Price, Consensus and EPS Surprise
Reinforcement Materials’ sales increased around 14.2% year over year to $643 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $94 million, up around 10.6% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing in the calendar year 2022 customers, which were partly offset by lower volumes due to consumer destocking and the adverse impact of the COVID outbreak in China.
Sales in the Performance Chemicals unit went down 6.5% year over year to $286 million in the reported quarter. EBIT decreased 44.2% to $29 million, mainly due to decreased volumes resulting from higher destocking, soft demand in key end markets like construction and the COVID outbreak in China and higher fixed costs as the company added new capacities in the quarter. Adverse currency movements also affected the same.
Financials
Cabot had cash and cash equivalents of $190 million at the end of the quarter, up around 6% year over year. The company’s long-term debt was $1,091 million, up about 53%.
Capital expenditures in the reported quarter were $35 million.
Cash flow from operating activities was $52 million in the quarter.
Outlook
Moving ahead, Cabot expects consumer destocking to end as volumes outside China improved in January from a month ago. The company also expects uncertainties in China to continue in the second quarter due to COVID-19 outbreaks hurting volumes and margins, but anticipates demand to gradually improve as the quarter progresses.
The company expects its Reinforcement Materials segment to benefit from customer agreements that took effect in January. The company’s Performance Chemicals segment is expected to benefit from the increasing demand for battery materials and inkjet applications and rising volumes across major product lines.
Cabot sees adjusted earnings per share for fiscal 2023 in the band of $6.25-$6.75.
Price Performance
Shares of Cabot are up 4.7% in the past year compared with an 8.3% rise of the industry.
Commercial Metals’ shares have gained 54.2% in the past year. The Zacks Consensus Estimate for CMC’s current-year earnings has been revised 22.1% upward in the past 60 days.
The company topped Zacks Consensus Estimate in three of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 16.7% on average.
Cal-Maine’s shares have gained 24% in the past year. The company has an earnings growth rate of 515.8% for the current year. The company topped Zacks Consensus Estimate in three of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 15.3% on average.
CLW’s shares have gained 15.3% in the past year. The company has an earnings growth rate of 278.6% for the current year.
Clearwater Paper beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 13% on average.
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Cabot's (CBT) Earnings and Revenues Outshine Estimates in Q1
Cabot Corporation (CBT - Free Report) recorded first-quarter fiscal 2023 (ending Dec 31, 2022) earnings of 93 cents per share against the year-ago quarter's loss of $1.57.
CBT posted adjusted earnings of 98 cents per share, down 24% from the year-ago quarter figure of $1.29. It surpassed the Zacks Consensus Estimate of 96 cents.
The company’s net sales in the first quarter were $965 million, which beat the Zacks Consensus Estimate of $868.5 million. Net sales decreased around 0.3% from $968 million reported in the prior-year quarter.
CBT’s performance in the first quarter was significantly impacted by lower volumes on account of consumer destocking, restrictions relating to COVID in China and weak demand in its Performance Chemicals segment. Unfavorable movements in currency and higher interest expenses also affected the company’s performance in the first quarter.
Cabot Corporation Price, Consensus and EPS Surprise
Cabot Corporation price-consensus-eps-surprise-chart | Cabot Corporation Quote
Segment Highlights
Reinforcement Materials’ sales increased around 14.2% year over year to $643 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $94 million, up around 10.6% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing in the calendar year 2022 customers, which were partly offset by lower volumes due to consumer destocking and the adverse impact of the COVID outbreak in China.
Sales in the Performance Chemicals unit went down 6.5% year over year to $286 million in the reported quarter. EBIT decreased 44.2% to $29 million, mainly due to decreased volumes resulting from higher destocking, soft demand in key end markets like construction and the COVID outbreak in China and higher fixed costs as the company added new capacities in the quarter. Adverse currency movements also affected the same.
Financials
Cabot had cash and cash equivalents of $190 million at the end of the quarter, up around 6% year over year. The company’s long-term debt was $1,091 million, up about 53%.
Capital expenditures in the reported quarter were $35 million.
Cash flow from operating activities was $52 million in the quarter.
Outlook
Moving ahead, Cabot expects consumer destocking to end as volumes outside China improved in January from a month ago. The company also expects uncertainties in China to continue in the second quarter due to COVID-19 outbreaks hurting volumes and margins, but anticipates demand to gradually improve as the quarter progresses.
The company expects its Reinforcement Materials segment to benefit from customer agreements that took effect in January. The company’s Performance Chemicals segment is expected to benefit from the increasing demand for battery materials and inkjet applications and rising volumes across major product lines.
Cabot sees adjusted earnings per share for fiscal 2023 in the band of $6.25-$6.75.
Price Performance
Shares of Cabot are up 4.7% in the past year compared with an 8.3% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Cabot currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks to consider in the basic materials space include Commercial Metals Company (CMC - Free Report) , Cal-Maine Foods, Inc. (CALM - Free Report) and Clearwater Paper Corporation (CLW - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commercial Metals’ shares have gained 54.2% in the past year. The Zacks Consensus Estimate for CMC’s current-year earnings has been revised 22.1% upward in the past 60 days.
The company topped Zacks Consensus Estimate in three of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 16.7% on average.
Cal-Maine’s shares have gained 24% in the past year. The company has an earnings growth rate of 515.8% for the current year. The company topped Zacks Consensus Estimate in three of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 15.3% on average.
CLW’s shares have gained 15.3% in the past year. The company has an earnings growth rate of 278.6% for the current year.
Clearwater Paper beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 13% on average.