Cabot Sets FY2027 EPS Outlook as Chemicals EBIT Rises

Cabot Corporation (NYSE: CBT) forecast fiscal 2027 adjusted earnings of $6.15 to $6.75 per share after its two main businesses moved in opposite directions in the fiscal 2026 fourth quarter. Performance Chemicals posted a 43% increase in segment EBIT, supported by battery materials and specialty carbons, while lower profitability per ton weighed on Reinforcement Materials.

For the quarter ended September 30, 2026, Cabot reported adjusted EPS of $1.61, compared with $1.70 a year earlier. GAAP diluted EPS rose to $1.25 from $0.79. Adjusted EBITDA was $181 million, down from $188 million in the prior-year quarter.

Full-year adjusted EPS was $6.42, compared with $7.25 in fiscal 2025, while GAAP diluted EPS declined to $4.02 from $6.02. Fiscal 2026 adjusted EBITDA totaled $735 million, versus $804 million a year earlier.

Performance Chemicals offsets pressure in reinforcement products

Performance Chemicals generated fourth-quarter segment EBIT of $60 million, up from $42 million a year earlier. Segment EBITDA increased 30% to $83 million, and the EBITDA margin expanded to 24% from 21%. Quarterly sales rose to $340 million from $308 million.

Cabot attributed the improvement to higher volumes in battery materials and specialty carbons, along with a more favorable product mix and lower costs. Full-year Performance Chemicals EBIT reached $235 million, compared with $194 million in fiscal 2025, as sales increased to $1.32 billion from $1.25 billion.

Battery Materials generated $43 million of EBITDA in fiscal 2026 with a 26% EBITDA margin, exceeding the company’s expectations. Cabot also signed a multiyear supply agreement with European battery manufacturer PowerCo SE and received a $50 million U.S. Department of Energy grant to support targeted investments in domestic conductive-additives capacity.

The company said investments are underway to support further battery-materials growth. Its presentation cited an industry forecast for battery demand to expand 15% through 2030, supported by electric vehicles and battery energy-storage systems. Cabot also sees growth opportunities in conductive and electronics applications tied to grid modernization, energy infrastructure and electronics demand.

Reinforcement Materials, by contrast, reported fourth-quarter segment EBIT of $87 million, down 27% from $119 million. Segment EBITDA fell 19% to $111 million, while the EBITDA margin narrowed to 18% from 24%. Sales increased to $634 million from $563 million.

Volumes rose 5% year over year, with gains in Asia and the Americas. However, those increases only partly offset lower gross profit per ton resulting from calendar 2026 customer agreements and a less favorable regional product mix. Full-year Reinforcement Materials EBIT was $379 million, down from $508 million in fiscal 2025, while sales declined to $2.30 billion from $2.34 billion.

Cabot completed its acquisition of a reinforcing-carbons plant in Mexico during fiscal 2026. The facility operates under a long-term Bridgestone supply agreement, and the company said integration was completed as planned and remained on track to meet its financial targets.

Cash flow supports investment and shareholder returns

Operating cash flow was $143 million in the fourth quarter and $421 million for the full year. Fourth-quarter free cash flow, a non-GAAP measure, was $88 million, while discretionary free cash flow was $117 million. The corresponding full-year figures were $214 million and $342 million.

Cabot returned $243 million to shareholders during fiscal 2026, comprising $97 million in dividends and $146 million in share repurchases. It ended September with $254 million in cash and cash equivalents, $1.3 billion of debt and $1.5 billion of liquidity. Net debt was 1.4 times EBITDA after the company expanded its corporate credit facility to $1.3 billion and completed a $350 million bond offering.

Fiscal 2027 outlook

In addition to its adjusted EPS forecast of $6.15 to $6.75, Cabot expects an operating tax rate of 28% to 30%, capital expenditures of $200 million to $230 million and share repurchases of approximately $150 million to $250 million in fiscal 2027. The company did not provide a corresponding GAAP EPS range because it said certain items, including possible restructuring, acquisition and litigation effects, cannot be predicted with reasonable certainty.

For the fiscal first quarter, management expects modest sequential EBIT improvement in Reinforcement Materials despite normal seasonal volume patterns, reflecting a more favorable regional product mix. EBIT is still expected to be lower year over year because of the outcomes of calendar 2026 customer agreements.

Performance Chemicals EBIT is expected to decline sequentially because of the timing of higher costs and a less favorable product mix, but rise from the prior-year period as volumes increase.

Cabot’s fiscal 2027 priorities include expanding volumes with key customers in battery materials, conductive products and electronics; completing previously announced restructuring activities; investing in battery-materials capacity and process technology; and considering acquisitions or other inorganic opportunities that could strengthen its competitive position and generate returns over three to five years.

The outlook remains subject to mixed end-market conditions. The presentation cited forecasts for only 0.9% growth in global tire production in calendar 2027, with declines in China and growth in South Asia. It also pointed to continued construction weakness in China and Europe and modest expected growth in global light-vehicle production. Other disclosed uncertainties include leadership-transition execution, raw-material and energy volatility, geopolitical conflicts, tariffs and currency movements, project delays, customer risks, environmental requirements and the possibility that capacity additions or new technologies do not deliver expected growth.