卡博特 (CBT) 2026财年第四季度业绩电话会：2027财年每股收益指引及电池业务增长

核心要点

• 卡博特公司（NYSE: CBT）公布2026财年第四季度调整后每股收益为1.61美元。全年调整后每股收益为6.42美元。
• 第四季度经营活动现金流达1.43亿美元，可自由支配自由现金流为1.17亿美元。全年经营活动现金流总计4.21亿美元。
• 补强材料业务第四季度部门EBIT从上年同期的1.19亿美元降至8700万美元，主要系每吨毛利下降和不利的区域产品结构抵消了5%的销量增长。
• 在电池材料和特种炭黑销量增加、有利的产品结构以及成本降低的推动下，高性能化学品业务第四季度部门EBIT同比增长43%至6000万美元。
• 管理层预计2027财年调整后每股收益为6.15美元至6.75美元，这一预期综合考虑了多种需求情境以及补强材料业务正在进行的客户谈判的不确定性。
• 电池材料业务在2026财年实现EBITDA 4300万美元，利润率为26%。管理层预计2027财年EBITDA将处于4000万美元的高段区间，新产能预计将于2028财年开始带来业绩贡献。

关键财务数据

业务与经营表现

补强材料

第四季度部门EBIT同比减少3200万美元至8700万美元。管理层将这一降幅主要归因于2026日历年客户协议签订后每吨毛利下降，以及区域产品结构欠佳。

在亚太和美洲地区的推动下，全球销量增长了5%。增量贡献包括印度尼西亚的新增产能以及在墨西哥收购的补强炭黑工厂。墨西哥工厂已完成既定的整合工作，其与普利司通签署的长期供应协议使用了该工厂的大部分产能，但并非全部产能。

需求环境依然受限。管理层提到，预计2026日历年全球轮胎产量增长0.3%，2027年增长0.9%，其中东南亚增长较强，但其他地区表现疲软或好坏参半。在欧洲，卡博特近期销量的下滑主要与2026日历年合同谈判中失去的市场份额有关。

高性能化学品

高性能化学品部门EBIT同比增长43%至6000万美元。电池材料和特种炭黑销量的提升、有利的产品结构以及更低的成本推动了业绩的提升。

电池、导电材料和电子应用领域的增长掩盖了汽车和建筑应用领域的疲软。管理层预计导电和电子应用在未来几年将增长约6%至8%，其中包括用于半导体CMP抛光液的气相二氧化硅的需求。

电池材料业务在2026财年实现EBITDA 4300万美元，利润率为26%。扣除美国能源部5000万美元的资助后，卡博特正在美中两国推进一项1.25亿美元的扩产计划。新增的导电添加剂产能预计将于2028财年开始对盈利产生贡献。

管理层业绩指引

每股收益指引区间反映了不同的需求情境以及2027日历年补强材料客户协议的潜在结果。在电话会议召开时，约三分之一的谈判已完成。

对于2027财年第一季度，管理层预计补强材料部门EBIT将较第四季度略有改善，主要得益于更有利的区域产品结构，但预计仍将低于上年同期水平。

高性能化学品业务第一季度部门EBIT预计将高于上年同期，但较第四季度环比下降。管理层预计环比减少600万至800万美元，主要归因于成本确认时点和季节性产品结构，而非基本面势头减弱。

卡博特预计2027财年资本支出中约有一半用于维持现有运营，另一半用于资助增长。大部分增长性支出将投向电池材料，约1000万美元用于补强材料的工艺与良率改进。

风险与关注事项

• 全球轮胎产量增长依然受限，同时区域趋势和贸易流向参差不齐。
• 2027日历年轮胎客户谈判尚未完全结束，给补强材料业务的盈利带来不确定性。
• 北美和欧洲轮胎进口量的减少尚未转化为该地区轮胎产量的普遍增长。
• 在多个市场中，汽车和建筑需求依然疲软，包括中国和欧洲的建筑活动。
• 即使定价机制能够保障每单位美元利润率，能源和原材料成本上升仍会增加营运资金需求。
• 受新产能投产相关成本影响，2027财年电池材料业务的盈利增长将有所减缓。

分析师问答要点

补强材料合同：管理层表示，2027日历年约三分之一的谈判已完成。不同客户的结果有所不同，公司认为目前对最终结果下结论还为时过早。

能源与原油敞口：卡博特通常通过补强材料的定价传导更高的原材料和能源成本，并在高性能化学品中采取定价调整手段。管理层表示，原材料指数每上涨1美元/桶，通常会在随后的几个季度内增加约600万美元的营运资金需求。油价下跌预计将释放营运资金，同时每吨美元利润总体上得到保障。

电池材料投资周期：管理层将2027财年定性为投资年。与扩产相关的成本将压制短期盈利，而中美两国新增的产能预计将从2028财年开始推动更强劲的销量增长。

中国市场定价：管理层表示，中国炭黑价格的变化主要由煤焦油价格驱动。在以现货为主导的市场中，价格调整迅速。卡博特指出其在中国区的业务具备盈利能力且能产生现金流，不过利润率仍低于西方市场水平。

业绩电话会完整文字记录

完整财报电话会议逐字稿

管理层陈述

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Fourth Quarter Fiscal Year 2026 Cabot Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded.

I am going to turn it over to our first speaker, Robert Rist, Vice President of Investor Relations. Please go ahead.

Robert Rist

Thank you, Victor. Good morning. I'd like to welcome you to the Cabot Corporation earnings teleconference. With me today are Erica McLaughlin, CEO and President; and Steve Delahunt, Interim CFO and Treasurer.

Last night, we released results for our fourth quarter of fiscal 2026, copies of which are posted in the Investor Relations section of our website. The slide deck that accompanies this call is also available in the Investor Relations portion of our website and will be available in conjunction with the replay of this call.

During this conference call, we will make forward-looking statements about our expected future operational and financial performance. Each forward-looking statement is subject to the risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Additional information regarding these factors appears under the heading Forward-Looking Statements in the press release we issued last night and in our annual report on Form 10-K for the fiscal year ending September 30, 2025, and in subsequent filings we make with the SEC, all of which are also available on the company's website.

In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. Any non-GAAP financial measure presented should not be considered to be an alternative to a financial measure required by GAAP. Any non-GAAP financial measure referenced on this call are reconciled to the most directly comparable GAAP financial measure in a table at the end of our earnings release issued last night and available in the Investors section of our website.

Also, as we typically do each year, I'd like to remind you that over the next several weeks, in conjunction with the vesting of restricted stock awards under our long-term incentive equity program, officers of the company will be selling shares to pay tax and other obligations related to their rewards.

I will now turn the call over to Erica, who will discuss the fourth quarter highlights, followed by several company and business updates. Steve will review the fourth quarter financial highlights and the business segment results. Following this, Eric will provide comments on our fiscal 2027 outlook and then open the floor to questions. Erica?

Erica McLaughlin

Thank you, Rob. Good morning, ladies and gentlemen, and thank you for joining us today.

Before we get into our fourth quarter results and full year results, I'd like to say a few words about our recently announced leadership transition. I'm honored to be joining you today for my first call as Cabot's CEO, and I'm excited about what's ahead.

I'd also like to thank Sean for his leadership and for his support during this transition. We have strong businesses and a talented experienced team, and I'm fortunate to have that foundation to build on. Having the various roles I have had at Cabot over the past 24 years, I know our businesses and our team well, and you should expect continuity in how we manage the company, including our commitment to a strong balance sheet and investment-grade credit profile and our balanced capital allocation framework.

My focus is on investing behind growth opportunities while staying disciplined in how we run the business to deliver long-term value for our shareholders. I'll share more on our priorities for fiscal 2027 later in the call.

Now starting with our fiscal 2026 results. We finished the year with solid financial performance. In the fourth quarter, we delivered adjusted EPS of $1.61 with Reinforcement Materials generating $87 million of segment EBIT and Performance Chemicals delivering $60 million. We also generated $143 million in cash flow from operations during the quarter and returned $70 million to shareholders.

For the full year, adjusted EPS was $6.42, reflecting strong execution across the portfolio despite a dynamic operating environment. Reinforcement Materials delivered $379 million of segment EBIT and Performance Chemicals generated $235 million. Importantly, our earnings performance translated into strong cash generation. We generated $421 million of cash flow from operations for the year, giving us the flexibility to continue investing in the business while also returning significant cash to shareholders.

In total, we returned $243 million to shareholders during fiscal 2026, including $97 million through dividends and $146 million through share repurchases. Taken together, these results demonstrate the strength of our portfolio, our focus on disciplined execution and the cash-generating capability of the company.

Our progress this year also extended beyond our financial results. We advanced a number of strategic priorities that we believe strengthen our business and position us to create value over the long term.

Let me highlight a few of those accomplishments. First, we successfully completed the acquisition of a reinforcing carbons facility in Mexico from Bridgestone. This acquisition strengthens our regional manufacturing footprint and enhances our ability to serve customers in the Americas. The facility is performing well. Integration activities have been completed as planned, and we remain on track to meet our financial targets. The long-term supply agreement with Bridgestone also provides a strong foundation as we move forward.

Our progress this year also extended to our sustainability performance with continued recognition from external third parties.For the sixth consecutive year, we earned a Platinum sustainability rating from EcoVadis, its highest level of recognition.

EcoVadis assesses the sustainability performance and management systems of more than 150,000 companies across more than 185 countries, and our platinum rating places Cabot among the top 1% of companies assessed globally.

This year, we improved our overall score by 5 points, our largest year-over-year improvement to date, while once again earning an outstanding rating in both the environment and labor and human rights categories. We were also recognized by the American Chemistry Council with 2 2026 Responsible Care Awards. We received the Waste Management and Water Stewardship Award for an initiative at our Franklin, Louisiana facility, and nearly all of our U.S. manufacturing facilities received the ACC Facility Safety Award based on their 2025 safety performance, reflecting our continued focus on strong safety practices across our operations.

In addition, we also took actions to enhance our financial flexibility in a dynamic environment. Our long-standing investment-grade credit profile enabled us to upsize our corporate credit facility and refinance our debt maturity on favorable terms. We increased our corporate credit facility to $1.3 billion, completed a $350 million senior notes offering at a 4.95% coupon and ended the year with $1.5 billion of liquidity. This provides us with significant flexibility as we navigate the current environment and continue investing behind our strategic growth opportunities.

And finally, Performance Chemicals had another strong year of strategic execution and financial performance, delivering a new level of segment EBIT. These results reflect the focused effort to grow in key end markets such as batteries and electronics. Our progress in Battery Materials is a good example of how we are leveraging our global asset footprint and strong product development capabilities to drive meaningful growth.

Let me spend a few minutes on the milestones we achieved this year. As we've highlighted on recent calls, Battery Materials represents an important long-term growth opportunity for Cabot. Fiscal 2026 was another year of meaningful progress, both financially and strategically.

For the year, Battery Materials delivered $43 million of EBITDA with an EBITDA margin of 26%. We are pleased with both the earnings contribution and the attractive margin profile we are achieving as we grow the business. These results were supported by strong customer demand and higher volumes and reflect the strength of our differentiated product portfolio, our deep and expanding relationships with leading battery customers and our global manufacturing and technology footprint.

One of the examples of where we built momentum with customers is the multiyear supply agreement with PowerCo that we announced this year. This was an important milestone that expanded our partnership with a leading European battery manufacturer. The agreement supports PowerCo in the localization of the battery supply chain as new lithium-ion battery capacity is built in Europe to serve growing electric vehicle and energy storage demand.

Local supply is increasingly important to battery customers as they build more resilient and efficient supply chains. Our global manufacturing and technology footprint enables us to serve customers locally across the major battery regions.

During fiscal 2026, we also progressed a number of investments to support this growing customer demand. We are investing to expand our capacity in a disciplined and capital-efficient way.

As we discussed last quarter, we announced $125 million capacity expansion program in the U.S. and China. This amount is net of a $50 million grant from the U.S. Department of Energy that was agreed to this year to support our investments for advanced conductive additives capacity at existing U.S. Cabot locations.

In addition to the investments we are making in the U.S., we are also adding conductive additives capacity in China to support continued battery growth with key customers. We expect this new capacity to begin contributing to earnings in fiscal 2028. We are making these investments against what we see as an attractive long-term market backdrop with battery demand currently projected to grow at a 15% CAGR through 2030.

As we look specifically at fiscal 2027, we see this as an important investment year for Battery Materials. We expect to continue growing the business from the $43 million EBITDA delivered in fiscal 2026 and expect EBITDA to be in the high $40 million range in fiscal 2027. We expect the capacity expansions that we are making during fiscal 2027 will enable more significant growth in 2028 when the investments come online.

So as we look to the future, we believe we are putting the pieces in place for the next phase of growth in Battery Materials. We have an attractive market opportunity, strong customer relationships, a differentiated product portfolio and targeted capacity investments that will expand our ability to serve customers across all major regions as demand grows.

With that, I'll turn the call over to Steve to take you through our fourth quarter financial results and segment performance in more detail. Steve?

Steven Delahunt

Thanks, Erica. In the fourth quarter, we delivered adjusted EPS of $1.61 with strong results in Performance Chemicals, partially offset by lower earnings in Reinforcement Materials.

For the full year, adjusted EPS was $6.42. Cash generation was a highlight of the quarter. We generated $143 million of cash flow from operations and $117 million of discretionary free cash flow, bringing full year operating cash flow to $421 million.

Capital expenditures were $55 million in the quarter and $207 million for the year. That reflects our balanced approach of maintaining and improving our existing operations while funding targeted growth investments, including in Battery Materials.

Our cash generation also allowed us to continue returning cash to shareholders, as Erica mentioned. Our balance sheet remains strong. We ended the year with $254 million of cash and cash equivalents, debt of approximately $1.3 billion and $1.5 billion of liquidity.

Following the refinancing actions completed during the year, we entered fiscal '27 with a solid investment-grade credit profile, meaningful financial flexibility. Our full year operating tax rate was 29%. Overall, we closed fiscal 2026 with strong cash generation and a solid balance sheet, which gives us the flexibility to keep investing in growth while returning cash to shareholders.

Let me now walk through the segment results in more detail, beginning with Reinforcement Materials. During the fourth quarter of fiscal 2026, EBIT for Reinforcement Materials was $87 million compared with $119 million in the prior year quarter.

EBITDA was $111 million and EBITDA margin was 18%. The year-over-year decline in earnings was primarily driven by lower gross profit per ton resulting from the outcomes of our calendar year 2026 customer agreements as well as a less favorable regional product mix. These impacts were partially offset by higher volumes.

Global volumes increased 5% year-over-year, driven by higher volumes in both Asia Pacific and the Americas, including higher volumes from our capacity addition in Indonesia and our acquisition in Mexico.

We were pleased with the volume performance in the quarter, particularly given the mixed demand environment across regions. While the outcome of the 2026 customer agreements has pressured year-over-year comparisons, our team remains focused on operational performance, close customer engagement and actions to improve the competitiveness and profitability of the business over the long term.

Looking ahead to the first quarter of fiscal 2027, we expect EBIT to improve modestly from the fourth quarter despite normal seasonal volume patterns. We expect the improvement to be driven primarily by higher gross profit per ton as regional product mix becomes more favorable. On a year-over-year basis, we expect EBIT to be lower, primarily reflecting the outcomes of our calendar year 2026 customer agreement.

Now turning to Performance Chemicals. Performance Chemicals finished fiscal '26 with another strong quarter, building on the momentum we've seen throughout the year. Segment EBIT increased 43% to $60 million from $42 million in the prior year quarter.

EBIT grew 30% to $83 million with EBITDA margin expanding to 24% from 21% over the same period. We're particularly pleased with the combination of earnings growth and margin expansion, which we believe reflects the strength of the portfolio and our continued focus on higher-value applications.

These results were supported by higher volumes in Battery Materials and Specialty Carbons compared with a year ago. We also benefited from a higher gross margin per ton, primarily driven by favorable product mix and lower costs.

Importantly, we continue to see good momentum in several of the attractive growth markets we've been targeting, which is helping to offset softer conditions in some of the more traditional end markets.

Looking ahead to the first quarter, we expect Performance Chemicals segment EBIT to be higher than the prior year period, primarily due to higher volumes, but below the strong level we delivered in the fourth quarter. Sequentially, we expect the timing of higher costs and a shift in the product mix to reduce EBIT by approximately $6 million to $8 million. The expected sequential change is primarily related to the timing of certain costs and seasonal sales patterns rather than a change in the underlying momentum of the segment.

Overall, we remain encouraged by the trajectory of the Performance Chemicals segment as we enter fiscal 2027 and by the growth opportunities across the portfolio. Below the segment level, we expect first quarter results to be impacted by higher corporate costs and a higher operating tax rate compared with the first quarter of fiscal 2026.

I will now turn it back to Erica to discuss our outlook and closing remarks. Erica?

Erica McLaughlin

Thanks, Steve. Before turning to our outlook, let me spend a few minutes on the current business environment for both our Reinforcement Materials and Performance Chemicals segments.

Overall, the business environment for Reinforcement Materials includes a backdrop of relatively flat expectations for global tire production. Industry forecasts point to a global tire production that is expected to grow at 0.3% in calendar year 2026 and grow at 0.9% in calendar year 2027. Within these global forecasts, there are differences in the tire production growth profile by region.

In 2026, tire production is expected to decline in the Americas, Europe and China, while strong growth in Southeast Asia is expected to support the modest global growth expectations. For 2027, the regional outlook also remains mixed with growth led by Southeast Asia and Europe, relatively flat volumes expected in the Americas and a decline in tire production in China.

In addition to the outlook for tire production, tire trade flows are also an important piece of the backdrop for Reinforcement Materials. Across North America, tariffs and trade measures on imported tires have increased in recent years, particularly on imports from Asia. With these measures in place, tire imports into the region are down 5% year-to-date through August.

While we have not yet seen this translate into higher tire production in 2026, over time, lower import levels could provide support for regional tire production and Reinforcement Materials demand in North America.

In Europe, anti-dumping duties took effect in July of 2026 on Chinese passenger and light truck tires with most in the range of 25% to 45% depending on the company. Countervailing duties are expected to be added in December 2026, which would increase the total duties assessed by company. These additional countervailing duties are expected to be in the range of 5% to 10%. Tire imports into Europe are down 11% year-to-date through August, with tire imports from China declining significantly, and some of that volume has shifted to tire imports from Southeast Asia.

Moving to South America. Rising tire imports continue to pressure regional tire production. While Brazil has maintained a 25% tariff on imported passenger car tires since 2023, these measures have not been sufficient to meaningfully curb imports or ease competitive pressure on domestic tire producers.

Tire imports into South America are up 21% year-to-date, continuing to weigh on regional tire production. These tire trends are expected to impact regional reinforcing carbons demand as reinforcing carbons demand levels usually track directionally with the tire production by region.

So as we look at the Reinforcement Materials overall, the external environment remains pressured with relatively flat demand projected and differences across regions. We expect the strongest areas of demand to be growth in Southeast Asia and Mexico, which are well supported by the investments we have made for capacity in Indonesia and the acquisition in Mexico.

In addition, we continue to optimize our global footprint to allow us to serve customers and to adapt as trade flow shift. Our long-standing relationships with leading tire makers allow us to work closely with them as they make choices around their capacity shifts. We will continue to remain nimble in our decisions to serve customers and improve the competitiveness of our global footprint.

If I move to Performance Chemicals, the business environment is mixed as this segment benefits from a more diverse portfolio of end markets to serve than our Reinforcement Materials segment.

As you will recall, this segment serves a broad range of end markets with automotive, infrastructure, batteries, electronics, construction and consumer applications. That diversity, combined with our participation in faster-growing applications, has been an important source of strength as our results this year demonstrate.

Across certain end markets, demand levels have been impacted by the broader geopolitical and economic conditions. For example, automotive production has been relatively subdued with global light vehicle production expected to decline 1.8% in calendar year 2026. It is expected that automotive industry will stabilize in calendar '27 with modest global growth of 0.5%, although trends will continue to vary by region. The strongest growth is expected in South America and Southeast Asia, while North America is expected to return to modest growth.

As a reminder, within Performance Chemicals, we participate in the automotive market across a range of applications, including coatings, adhesives and conductive compounds for various plastic parts.

Construction-related applications remain soft as well, particularly in China and Europe. New construction in China declined 25% year-over-year through August 2026, reflecting the continued weakness in the property market. European construction activity also remained in contraction with residential construction particularly weak. The U.S. has been more resilient with building permits up 2% year-to-date through August.

For Cabot, we supply products for silicone sealants, reinforcing composites and insulation materials that are used in construction end markets. At the same time, there are many areas of attractive growth across several end markets served by Performance Chemicals, such as batteries, conductive and electronics applications. Battery demand continues to benefit from growing electric vehicle adoption and stationary energy storage, supporting our expectation for 15% market growth through 2030.

In electronics, we see attractive growth opportunities across a range of applications, including our fumed silica used in CMP polishing slurries for the semiconductor industry, specialty carbons used in displays and specialty carbons and compounds for other conductive applications. Additional growth is driven by electrical grid modernization and energy infrastructure investments used due to data center growth that support demand for our specialty carbons and compounds used in power distribution cables.

Performance Chemicals has delivered strong EBIT growth over the last 3 years despite softness in some of our end markets. So while the market environment is not uniformly strong, our track record speaks to the strength of Cabot's broad range of products across Performance Chemicals and our global asset footprint that allows us to deliver volume growth aligned with these macro trends.

With this business environment in mind, we expect fiscal '27 adjusted earnings per share to be in the range of $6.15 to $6.75. This range reflects a variety of potential outcomes in what remains a dynamic environment. The range contemplates various demand scenarios as well as a range of potential outcomes for our calendar year 2027 customer agreements in Reinforcement Materials, which are still being actively negotiated. We will remain focused on commercial execution, cost management, completing our restructuring and optimization actions and ensuring disciplined capital allocation.

Our outlook also assumes an operating tax rate of 28% to 30% and capital expenditures in the range of $200 million to $230 million. Our investment plans include spending to maintain our existing operations along with targeted growth investments. We expect to generate favorable free cash flow supporting both our strategic investments and the return of cash to shareholders.

So while fiscal 2027 is expected to remain a mixed business environment, we remain confident in our ability to manage through the environment by focusing on the factors within our control, capturing growth where we see it and maintaining our financial discipline.

With that outlook in mind, let me turn to our priorities for fiscal 2027. First, we're focused on growing with key customers in attractive end markets. We're working closely with Reinforcement Materials customers to meet their demand needs around the world with strong quality, reliable supply and a broad product offering.

We continue to see growth opportunities in battery materials, conductive and electronic applications where our differentiated product and technical capabilities position us to participate in long-term demand growth. Our focus is on translating these opportunities into sustained volume growth across the portfolio.

Second, we'll continue to focus on ways to strengthen our competitiveness. Our commercial excellence and operational excellence programs remain central to how we run the business, and we will continue to adapt to the changing business environment to drive strong performance. We are focused on completing our previously announced restructuring actions and other cost optimization activities, and we believe that these are important steps to improve efficiency and strengthen our cost position.

Third, we'll continue to advance our organic growth projects while remaining disciplined about where we invest.

As I discussed earlier, we are investing in battery materials with additional conductive additive capacity with those investments expected to begin contributing in fiscal 2028. We will also continue investing in process technology enhancements to enhance our competitiveness in Reinforcement Materials.

Finally, we'll pursue inorganic opportunities that, one, strengthen our competitive position and complement our portfolio; two, drive growth; and three, provide attractive economic returns in a 3 to 5 year time frame.

We'll look for opportunities to increase scale, geographic access and participation across our carbon black and silica franchises, and we will also target adjacent materials and technology investments in high-growth areas. These areas include batteries, conductive and electronic materials.

We'll evaluate any opportunities with the same financial discipline we apply to our organic investments while protecting our investment-grade credit rating. Taken together, these priorities are about controlling what we can control in a dynamic business environment while continuing to invest in the areas that we believe will drive Cabot's longer-term growth. We believe the balance of near-term execution, targeted investment and disciplined capital deployment is the right approach as we enter fiscal 2027.

So in conclusion, Cabot is well positioned to deliver value for our shareholders. We have a very strong foundation that includes leading positions in materials that are critical to our customers' products, and we participate in high-growth applications that provide opportunity to expand the business and improve our product mix over time.

We have a strong competitive cost position and a flexible global footprint that allows us to serve customers around the world and adapt as business conditions change. And our strong cash generation, supported by our proven discipline around managing working capital and capital spending gives us the financial flexibility to invest through the cycle and enable Cabot to continue to grow, launch new products and enhance our competitive position. We'll continue to balance those investments with returning cash to shareholders while maintaining an investment-grade credit rating.

So while the near-term environment remains dynamic, these strengths give me great confidence in Cabot's ability to continue to execute well, deliver strong financial performance and strengthen our leadership position. I'm excited about the opportunities we have to grow and create long-term value for our shareholders. Thank you again for joining us today.

I'll now turn it over to Victor to open the floor for questions.

Operator

[Operator Instructions] Our first question will come from the line of David Begleiter from Deutsche Bank.

分析师问答

Emily Fusco

This is Emily Fusco on for Dave Begleiter. How are tire contract negotiations proceeding? And maybe if you could give any color on expectations by region or any what percentage of negotiations have been settled? Just any color there would be great.

Erica McLaughlin

Sure. Emily, thanks for the question. So right now, we're in the midst of our calendar year '27 tire customer negotiations. I'd say we've concluded about 1/3 of those negotiations at this stage. We are I would say the outcomes right now vary on a case-by-case basis and it's a bit premature to characterize final outcomes before the process is complete. So right now, the range that we've provided gives the best view of the progress and the outcomes we've seen to date. And of course, we provide fuller updates as the process concludes later in the year.

Operator

Our next question will come from the line of Peter Osterland from Truist Securities.

Unknown Analyst

This is Alex on for Pete. I was wondering how you see the current energy, freight and logistics environment flowing through the P&L? And is there anything to point out in regards to higher freight prices, maybe keeping some tire imports incrementally out of some of the more freight-dependent markets?

Erica McLaughlin

Yes. So thanks, Alex, for the question. So I think as you know, most of our Reinforcement Materials products stay within regions. So the freight and logistics associated with moving products Reinforcement is largely just within region and properly, I'd say, contracted. So there's not too much impact we see from that. And then in our Performance Chemicals segment, where we do move some of our specialty materials across regions, also, I'd say, well-negotiated contracts on the logistics and then pricing that we would use as a lever to counteract any increases.

And so we've successfully implemented price increases as we've moved through 2026 in Performance Chemicals, as we've talked about before. And that would be -- we see our margins holding very nicely in that segment. The impact of higher energy and feedstock costs is probably more predominant than the logistics. And so these vary by segment as well. So in Reinforcement Materials, generally have the pricing construct to pass on higher feedstock and energy costs that helps protect the dollar margin profitability in that region. And then we also have what we call our energy centers, which produce steam or electricity. And as energy prices rise, that usually rises as well and so becomes more favorable for us.

In Performance Chemicals, the impact is also managed through pricing actions, which we've taken this year as we see pricing increase. And we've -- while this can vary over time and by quarter, we've been quite successful in protecting margins in our history and very disciplined in managing pricing and execution in that area. And so where you see the biggest impact, I would say, then on the rise in energy is in our working capital balances. So as the input costs rise, so does the value of inventory and accounts receivable that work them way through.

So in this environment, we have seen an increase in our net working capital balances that you can see in 2026. And we generally think of this as every dollar per barrel increase in our feedstock indices usually equates to about a $6 million increase in the working capital balance on the balance sheet. Now this takes time over a few quarters as we implement pricing and that flows through the balance sheet. But that's usually what we see. And then if energy prices come down, we see a release of that cash.

So overall, I think our contractual structures in Reinforcement Materials and the pricing actions we take in Performance Chemicals as well as the strong liquidity position we have leave us very well positioned to manage the periods of higher energy and feedstock costs.

Operator

Our next question comes from the line of John Roberts from Mizuho Securities.

Saurabh Dhir

This is Saurabh Dhir on for John Roberts. Congratulations on the new role, Erica, and good to see you back, Steve. I think the first question is, given the contract negotiations and the flat tire demand you're seeing right now, how should we think about the Reinforcement segment earnings this year versus last year based on the midpoint of your guidance? And then how are you factoring in the impact of lower tire imports into North America and Europe into your outlook?

Erica McLaughlin

Yes. So what I'd say is, as I answered earlier, that we're in the midst of these negotiations now and try to provide the backdrop of the environment we're seeing. So as you said, the market conditions do remain challenging right now with low growth in tire production. There are some positive signs in terms of the imports into North America and Europe specifically. But we've not seen the lower imports yet translate into higher production broadly, I'd say, in the Western regions. And so these are the business conditions with which we're doing the negotiations right now. And so this is what informs the range we've provided in terms of adjusted EPS at the $6.15 to $6.75 earnings per share rate, which would take into account different outcomes as we continue to complete these negotiations.

But as you're saying, the backdrop is challenging with the low growth, and we're early in terms of finalizing negotiations. So I'd say we've provided our best view of the range of outcomes in the range we have given.

Saurabh Dhir

Got it. And just secondly on the oil price, like what oil price are you embedding in your guidance? And can you help us understand like the sensitivity to the earnings of a meaningfully lower oil price scenario?

Erica McLaughlin

Sure. So we usually use just the forward curve at the time that we're doing the forecast. So this is pretty elevated at the current price. And then usually, the forward curve is relatively flat, to be honest, in most scenarios. As I talked about, the lower oil, really, we would reset pricing as the oil moves. And so from a profitability perspective, there would not -- there should not be a meaningful impact to us because we will keep our margin per ton amount consistent. That's how we set up the pricing arrangements we have.

What you do see and you see it in this quarter is the higher oil on a percent margin basis, you can see this in Reinforcement Materials does impact the calculation. And so as the revenue goes up because the pricing goes up, but yet our profit per ton in dollars is meant to stay the same, you can see that percentage be impacted. So what you would see in a lower oil, while we protect the dollar margin, you'd see the percent margin increase. But that would be what you see on the P&L.

And then what you see on the cash flow would really be a release of working capital come through over a few quarters as the pricing for buying the inventory goes down based on the lower oil and then the receivables would also decrease based on us resetting pricing as oil comes down.

Operator

Our next question will come from the line of Josh Spector from UBS.

Christopher Perrella

It's Chris Perrella on for Josh. As I think about the outlook for Performance Chemicals next year, can you just walk through, I guess, your assumptions there? And what's driving, I guess, the slowdown in the battery materials consumption, at least temporarily?

Erica McLaughlin

Sure. I would say, as you talked about with the battery materials, I'd say 2027 is an important investment year for us. And so we'll begin to incur costs associated with bringing that new capacity online, which temper earnings for 2027. But then we would expect to see an increase in 2028 as that capacity enables our volumes to grow again at a higher rate. So I would just think about it sort of as 2027, setting up 2028 growth.

In terms of the other Performance Chemicals growth areas that we highlighted, we would expect those to continue. So electronics applications, one of our fastest-growing areas. I highlighted in my comments that one of the biggest opportunities is we sell fumed silica that's used as an abrasive in the CMP polishing slurries for semiconductors and we're a leading supplier to the major slurry producers. So if you think about the underlying driver there, AI is driving the demand for advanced chips and more complex chip designs, and there's more polishing steps that then go into this. So we expect this demand to be growing quite nicely in the mid to high single-digit rate over the next several years.

Beyond that application, we have materials that go into other electronic applications. For example, we produce conductive compounds that protect electronic components and packaging from static discharge, and that's growing nicely as well as specialty carbons that's used to improve image quality and electronic displays.

So overall, our electronic portfolio plays really well into the strength of Cabot, where we have high-purity materials and particle engineering that goes into these types of applications that are growing nicely over time. So overall, if you think of the conductive and electronic applications, we would expect growth in kind of the 6% to 8% range over the coming years. So this sets up Performance Chemicals nicely in '27 and beyond. But as I talked about in terms of the environment, there are applications within Performance Chemicals such as automotive that are still impacted by the economic outlook. And so those are a lower growth expectation for us.

Christopher Perrella

All right. And then just a quick follow-up. I know the China coal tar price has been elevated. Can you talk about the impact in the September quarter and sort of how that impacts the market, especially with Asia RM pricing and demand?

Erica McLaughlin

Yes. So I'd say it's mainly a mix impact to us in terms of the Asia because as you could see in the volumes that we reported for Reinforcement Materials in the fourth quarter, Asia was a large growth driver of an increase in volume. So as you think about that, the regional mix of those volumes versus volumes in Western regions is less favorable.

In terms of the pricing, the China market is a predominantly spot pricing market. So as coal tar prices move, we move prices pretty instantaneously with the market and the rest of the carbon black producers do the same. So as coal tar moves around, we increase or decrease pricing associated with that move, and that's what we did in the fourth quarter.

Operator

And our next question will come from the line of Laurence Alexander from Jefferies.

Daniel Rizzo

This is Dan Rizzo. So just thinking about capacity CapEx for the next couple of years, you have $125 million capacity expansion in the U.S., China for conductive additives. I'm sorry if I missed this, but is there other expansions besides that, that I'm not remembering?

Erica McLaughlin

Those are the main expansions in terms of capacity, Dan. So we gave a range on CapEx of $200 million to $230 million for the year, probably about half of that is maintenance capital, about half of that would be growth CapEx. And so I'd say a majority of that spend is for the battery materials investments. We'll also have investments in technology advancements for Reinforcement Materials. These are yield and other process technologies that really improve the cost position of Reinforcement Materials. So there is some in that, maybe about $10 million of growth in that. And then we have a smattering of other smaller, I call them profit adding projects that we do at specific plant locations also to improve competitiveness.

Daniel Rizzo

Okay. And then with the plant in Mexico, the deal with Bridgestone, is that plant completely sold out of Bridgestone? Or is there additional capacity there that you could use for other people or other customers? And secondly, is there a take-or-pay component with that plant by Bridgestone?

Erica McLaughlin

So I'd say the Bridgestone agreement utilizes a significant portion of the capacity of that plant, but not all of it. So we have the ability to sell into the market additional capacity at that plant, which is nice. And then I'd say I can't give too many specifics on the long-term agreement with Bridgestone, but we're quite confident in the ability for us to execute that contract as planned in terms of Bridgestone taking the products we have agreed to.

Operator

And our next question will come from the line of Jeff Zekauskas from JPMorgan.

Wenyi Huang

This is Lydia Huang on for Jeff. Can you talk about volume dynamics for Reinforcement in Europe? It seems like import levels have moderated. Are the volume declines customer-specific? Or is it a general trend in the market?

Erica McLaughlin

I'd say so overall, for tire production in Europe, I'd say it's -- we have not seen much of an increase this year even with tire imports declining. So it hasn't led to a robust tire production market. Our specific volumes being down, if you remember when we talked about the contract outcomes in the 2026 calendar year contracts, we did note that we had lost share in those contract outcomes. So that's the main driver of why our volumes have been down in this past quarter and earlier this year.

Wenyi Huang

And so on China, it looks like Chinese carbon black prices surged and then round tripped in September, but not fully round trip. Is it entirely driven by coal tar prices? And how are your margins in China today?

Erica McLaughlin

Yes. So those changes, Lydia, would be driven by coal tar prices. So there was a spike in coal tar that drove the pricing up, and it's moderated somewhat, so it's come down. So I would say that's the main driver of why you see the pricing levels move. I wouldn't say there's a change really in the competitive environment in China. It remains a pretty high competitive intensity, I would say. And so that has not altered between the last couple of quarters.

In terms of our margin profile, I'd say it's still attractive and the business in China continues to make good money, good returns, high cash flow. So we're positive in terms of that. But when you look at the margin levels compared to, say, Western margin levels, they are lower, and that's been consistent for as long as we've been doing business in China.

Operator

And this concludes the question-and-answer session. I would now like to turn it back over to Erica for closing remarks.

Erica McLaughlin

Well, thank you all for joining us today. We appreciate your continued support of Cabot.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.