Cabot reports fiscal Q4 net income of US$49M, up from US$36M a year earlier, on revenues up 5.9% to US$898; full-year income down 60.1% to US$155M despite revenues up 4.9% to US$3.46B
Allison Oesterle
BOSTON
,
October 30, 2013
(press release)
–
Fiscal Year 2013 Adjusted EPS of $2.91 and Diluted EPS of $2.38
Quarter Year Quarter Year Year over Year Change Sequential Change Income from continuing operations before income taxes and equity in earnings of affiliated companies Diluted earnings per share of common stock attributable to Cabot Corporation Income from continuing operations before income taxes and equity in earnings of affiliated companies Diluted earnings per share of common stock attributable to Cabot Corporation (A) Purification Solutions includes only two months of results in fiscal 2012 due to the acquisition of Norit N.V. by Cabot Corporation on July 31, 2012. (B) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, the impact of unearned revenue and the removal of 100% of the sales of an equity method affiliate. (C) Segment EBIT is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in earnings of affiliated companies, royalty income, and allocated corporate costs. (D) The first three quarters of fiscal 2013 Segment EBIT and General unallocated (expense) income have been recast to reflect an allocation of costs to the Purification Solutions segment for corporate administrative and functional support. Prior to the fourth quarter of fiscal 2013, Segment EBIT amounts did not include such allocations. These allocations were previously reflected in Unallocated corporate costs and other segment results. (E) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. (F) General unallocated (expense) income includes foreign currency transaction gains (losses), interest income, dividend income, the profit related to unearned revenue, and the impact of LIFO accounting. (G) Amounts relate primarily to the divesture of the Supermetals business. (H) Adjusted EPS is a non-GAAP measure, and a reconciliation of Adjusted EPS to GAAP EPS is presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. Diluted earnings per share of common stock attributable to Cabot Corporation (A) Purification Solutions includes only two months of results in fiscal 2012 due to the acquisition of Norit N.V. by Cabot Corporation on July 31, 2012. (B) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, the impact of unearned revenue and the removal of 100% of the sales of an equity method affiliate. (C) Segment EBIT is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in earnings of affiliated companies, royalty income, and allocated corporate costs. (D) The first three quarters of fiscal 2013 Segment EBIT and General unallocated income (expense) have been recast to reflect an allocation of costs to the Purification Solutions segment for corporate administrative and functional support. Prior to the fourth quarter of fiscal 2013, Segment EBIT amounts did not include such allocations. These allocations were previously reflected in Unallocated corporate costs and other segment results. (E) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. (F) General unallocated income (expense) includes foreign currency transaction gains (losses), interest income, dividend income, the profit related to unearned revenue, and the impact of LIFO accounting. (G) Amounts relate primarily to the divesture of the Supermetals business. (H) Adjusted EPS is a non-GAAP measure, and a reconciliation of Adjusted EPS to GAAP EPS is presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. Certain items before and after income taxes Statement of Operations Line Item (C) Reconciliation of Provision for income taxes, excluding certain items, to Provision for income taxes Reconciliation of the effective tax rate to the operating tax rate Dec. Q Mar. Q Reconciliation of Adjusted EPS to GAAP EPS $ 0.71 $ 3.70 0.16 2.92 $ 0.55 $ 0.78 (0.08 ) (0.18 ) $ 0.63 $ 0.96 (A) Per share amounts are calculated after tax and, where applicable, noncontrolling interests, net of tax. (B) Amounts relate primarily to the divesture of the Supermetals Business. (C) This table indicates the line items where certain items are recorded in the table titled Cabot Corporation Consolidated Statements of Operations.
Cabot Corporation (NYSE: CBT) today announced results for its fourth quarter and full fiscal year 2013.
Key Highlights
(In millions, except per share amounts)
Fiscal 2013
Fiscal 2012
Fourth
Full
Fourth
Full
Net sales
$
898
$
3,463
$
848
$
3,300
Net income attributable to Cabot Corporation
$
49
$
155
$
36
$
388
Net earnings per share attributable to Cabot Corporation
$
0.75
$
2.38
$
0.56
$
5.99
Less Adjustments:
Net income per share from discontinued operations
$
0.02
$
0.04
$
0.02
$
3.16
Certain items per share
$
(0.05
)
$
(0.57
)
$
(0.19
)
$
(0.49
)
Adjusted EPS
$
0.78
$
2.91
$
0.73
$
3.32
Commenting on the results, Cabot President and CEO Patrick Prevost, said, “In fiscal 2013, we delivered $529 million of adjusted EBITDA through record-setting performance in Advanced Technologies, growth in Performance Materials, and the addition of Purification Solutions. We also continued to focus on improving the competitiveness of our businesses through strategic expansions, introduction of new products, and the execution of business initiatives. Over the past year, we completed our new carbon black plant in China and our fumed silica expansion in Wales. We introduced a number of new products, particularly for specialty applications such as silicone elastomers, adhesives, and plastics. In addition, we introduced new materials to the market through our carbon and graphene-based additives for batteries. Our execution of key business initiatives, such as the integration of Norit, the reduction of net working capital and the completion of restructuring actions in Advanced Technologies and Reinforcement Materials, further strengthened the company.”
Prevost continued, “This was the second quarter in a row of increasing volumes as demand in many of our end markets continued to improve. Higher volumes across the segments drove the year-over-year improvement in Total Segment EBIT and adjusted EPS. We continued our focus on reducing net working capital to generate cash. This resulted in a net working capital improvement of $139 million this quarter, but caused an $11 million unfavorable impact to our operating results through the reduction of inventory. We are pleased with the fourth quarter performance of Advanced Technologies, where we experienced another strong quarter.”
Financial Detail
For the fourth quarter of fiscal 2013, net income attributable to Cabot Corporation was $49 million ($0.75 per diluted common share). Net income includes a per share benefit of $0.02 from discontinued operations and a charge of $0.05 from certain items, principally for restructuring items. Adjusted EPS for the fourth quarter of fiscal 2013 was $0.78 per share.
In the fourth quarter, certain functional and indirect cost allocations were included in the Purification Solutions segment operating income that previously had not been allocated to the segment. Segment earnings before interest and taxes have been recast for each quarter of fiscal 2013 to reflect the allocation change. The inclusion of these functional and indirect cost allocations resulted in approximately $10 million of annual costs now allocated to the Purification Solutions segment, with an offsetting cost reduction to other segment earnings and unallocated corporate costs. Recast segment earnings before interest and taxes and unallocated corporate costs are included in the attached financial tables.
Segment Results
Reinforcement Materials -- Fourth quarter fiscal 2013 EBIT in Reinforcement Materials increased by $6 million compared to the same quarter of fiscal 2012 due to 4% higher volumes from a recovery in demand in most regions. This was partially offset by lower pricing in Asia and Europe and $2 million of higher costs associated with the reduction of inventory levels. Sequentially, EBIT decreased by $2 million due to higher feedstock costs and continued pricing pressure in Europe and Asia. These decreases were partially offset by 1% higher volumes.
Global and regional volume changes for Reinforcement Materials for the fourth quarter of fiscal 2013 as compared to the same quarter of the prior year and the third quarter of fiscal 2013 are included in the table below:
Fourth Quarter
Fourth Quarter
Global
4%
1%
Japan
8%
8%
Southeast Asia
5%
8%
China
(3%)
(3%)
Europe, Middle East, Africa
7%
(1%)
North America
2%
2%
South America
14%
1%
Performance Materials -- Fourth quarter fiscal 2013 EBIT in Performance Materials decreased $1 million compared to the fourth quarter of fiscal 2012. Volumes in Fumed Metal Oxides increased 8% from new product introductions and the successful commercialization of new capacity. Volumes were 3% higher in Specialty Carbons and Compounds though with a less favorable product mix. The volume increases were also offset by $5 million of higher costs associated with the reduction in inventory levels. Sequentially, Performance Materials EBIT decreased by $2 million, principally due to a less favorable product mix. This was partially offset by 3% higher volumes in Specialty Carbons and Compounds and 1% higher volumes in Fumed Metal Oxides.
Advanced Technologies -- Advanced Technologies EBIT increased by $10 million from the fourth quarter of fiscal 2012. The EBIT increase was driven by higher rental activity and the completion of significant rental jobs in Specialty Fluids, higher royalties and technology payments in Elastomer Composites, and cost savings from segment restructuring actions. Sequentially, Advanced Technologies EBIT decreased $1 million as compared to the third quarter of 2013 due to $5 million of Aerogel royalty revenue in the third quarter of fiscal 2013 that did not repeat in the fourth quarter. This was partially offset by higher volumes, royalties and technology payments in Elastomer Composites.
Purification Solutions -- For the fourth quarter of fiscal 2013, Purification Solutions EBIT decreased by $13 million compared to the same quarter of fiscal 2012. The EBIT decrease was driven by lower volumes and pricing in the gas and air purification end market, $4 million of higher costs associated with the reduction in inventory levels, and $2 million of functional and indirect cost allocations. Sequentially, Purification Solutions EBIT decreased $7 million due to higher costs and the timing of a royalty payment. The higher costs were associated with asset repairs and the reduction of inventory levels from unit outages that occurred in the third quarter of fiscal 2013 and extended into the fourth quarter. In addition, a $3 million royalty payment that was received in the third quarter of fiscal 2013 did not repeat in the fourth quarter. Volumes increased by 5% sequentially driven by growth in water, food and beverage and chemicals, but this was offset by a less favorable product mix.
Cash Performance -- The Company ended the fourth quarter of fiscal 2013 with a cash balance of $95 million, an increase of $19 million from the third quarter of fiscal 2013. During the fourth quarter of fiscal 2013, the Company spent $69 million on capital expenditures and reduced debt by $154 million. Sources of cash during the fourth quarter include adjusted EBITDA of $135 million and a decrease in net working capital of $139 million.
Taxes -- During the fourth quarter of fiscal 2013, the Company recorded a net tax provision of $7 million for an effective tax rate of 13%. Excluding the impact of certain items, the operating tax rate on continuing operations for the fourth quarter of fiscal 2013 was 24%. The effective tax rate for fiscal 2013 was 28% and excluding the impact of certain items, the operating tax rate on continuing operations for fiscal 2013 was 26%.
Outlook
“We are pleased with the positive demand trends we have been seeing for the last two quarters,” Prevost said, commenting on the outlook for the Company. “Tire industry demand is improving in Europe, albeit at a slow rate. We are experiencing growth in South America and Asia. The North America replacement tire market is improving, but local tire production is under pressure from import competition. The Purification Solutions segment continues to show solid growth in most end applications and we have been actively engaged with customers in the North American mercury-removal sector for carbon injection equipment and future supply of activated carbon. We expect continued momentum in the Fumed Metal Oxides and Specialty Carbons and Compounds businesses from improving demand in Europe and China. Finally, we are pleased with the second quarter in a row of strong Advanced Technologies performance. We are cautiously optimistic about fiscal 2014 after seeing signs of demand improvement in most of our global businesses.”
Earnings Call
The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on Wednesday, October 30, 2013. The call can be accessed through Cabot’s investor relations website at http://investor.cabot-corp.com
About Cabot Corporation
Cabot Corporation (NYSE: CBT) is a global specialty chemicals and performance materials company, headquartered in Boston, Massachusetts. The company is a leading provider of rubber and specialty carbons, activated carbon, inkjet colorants , cesium formate drilling fluids, fumed silica, aerogel, and elastomer composites. For more information on Cabot, please visit the company’s website at: http://www.cabotcorp.com.
Forward-Looking Statements -- This earnings release contains forward-looking statements based on management’s current expectations, estimates and projections. All statements that address expectations or projections about the future, including our actions that will drive earnings growth, demand for our products, and expectations for growth are forward-looking statements. Some of the forward-looking statements may be identified by words like “expects,” “anticipates,” “plans,” “intends,” “projects,” “indicates,” and similar expressions. Forward-looking statements are based on our current expectations, assumptions, estimates and projections about Cabot's businesses and strategies, market trends and conditions, economic conditions and other factors. These statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control and difficult to predict. If known or unknown risks materialize, or should underlying assumptions prove inaccurate, our actual results could differ materially from past results and from those expressed in the forward-looking statement. Important factors that could cause our results to differ materially from those expressed in the forward-looking statements include, but are not limited to lower than expected demand for our products; the loss of one or more of our important customers; our inability to complete capacity expansions or other development projects, including at our mine in Manitoba, as planned; the timing of implementation of environmental regulations; our failure to develop new products or to keep pace with technological developments; patent rights of others; the timely commercialization of products under development (which may be disrupted or delayed by technical difficulties, market acceptance, competitors' new products, as well as difficulties in moving from the experimental stage to the production stage); changes in raw material costs; demand for our customers' products; competitors' reactions to market conditions; delays in the successful integration of structural changes, including acquisitions or joint ventures; the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries where we do business; and severe weather events that cause business interruptions, including plant and power outages or disruptions in supplier or customer operations. These factors are discussed more fully in the reports we file with the Securities and Exchange Commission, particularly our latest annual report on Form 10-K.
Explanation of Terms Used and Use of Non-GAAP Financial Measures -- The preceding discussion of our results and the accompanying financial tables report adjusted EPS, total segment earnings before interest and taxes, “Total Segment EBIT”, operating tax rate and adjusted EBITDA, which are non-GAAP financial measures. Our chief operating decision-maker uses these non-GAAP financial measures to evaluate the performance of the Company in terms of profitability. We believe that these measures also assist our investors in evaluating the changes in our results and the Company's performance.
In calculating adjusted EPS, we exclude from our net income per share from continuing operations certain items of expense and income that management does not consider representative of the Company's ongoing operations. Adjusted EPS should be considered as supplemental to, and not as a replacement for, EPS determined in accordance with GAAP. A reconciliation of adjusted EPS to EPS from continuing operations, the most directly comparable GAAP financial measure, and the certain items that are excluded from our calculation of adjusted EPS, are provided in the table titled "Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate.”
Total Segment EBIT is a non-GAAP performance measure, and should not be considered an alternative for Income (loss) from continuing operations before taxes, the most directly comparable GAAP financial measure. In calculating Total Segment EBIT, we exclude “certain items”, meaning items that management does not consider representative of our fundamental segment results, as well as items that are not allocated to our business segments, such as interest expense and other corporate costs. Our Chief Operating Decision Maker uses segment EBIT to evaluate the operating results of each segment and to allocate resources to the segments. We believe that this non-GAAP measure provides useful supplemental information for our investors as it is an important indicator of the Company’s operational strength and performance. Investors should consider the limitations associated with this non-GAAP measure, including the potential lack of comparability of this measure from one company to another. A reconciliation of Total Segment EBIT to Income (loss) from continuing operations before income taxes and equity in net earnings of affiliate companies is provided in the table titled, “Summary Results by Segments.”
The term “product mix” refers to the various types and grades, or mix, of products sold in a particular business or segment during the period, and the positive or negative impact of that mix on the revenue or profitability of the business or segment.
The term “operating tax rate” is a non-GAAP financial measure and represents the tax rate on our recurring operating results. This rate excludes discrete tax items, which are unusual or infrequent items that are excluded from the estimated annual effective tax rate and other tax items, including the impact of the timing of losses in certain jurisdictions, cumulative rate adjustment and the impact of certain items on both operating income and tax provision. A reconciliation of operating tax rate to effective tax rate , the most directly comparable GAAP financial measure is provided in the table titled "Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate.”
“Adjusted EBITDA” is a non-GAAP financial measure and refers to earnings before interest, taxes, depreciation and amortization, excluding items that management does not consider representative of the fundamental segment results. A reconciliation of Adjusted EBITDA from segment EBIT for the fourth quarter and full fiscal year of 2013, and for the full fiscal year of 2012 is provided on the investor portion of our website at http://investor.cabot-corp.com, under the Non-GAAP Reconciliations section.
Fourth Quarter Earnings Announcement, Fiscal 2013
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Periods ended September 30
Three Months
Twelve Months
Dollars in millions, except per share amounts (unaudited)
2013
2012
2013
2012
Net sales and other operating revenues
$
898
$
848
$
3,463
$
3,300
Cost of sales
730
691
2,827
2,652
Gross profit
168
157
636
648
Selling and administrative expenses
76
86
299
285
Research and technical expenses
19
19
74
73
Income from operations
73
52
263
290
Other (expense) income
Interest and dividend income
1
1
5
4
Interest expense
(15
)
(16
)
(62
)
(46
)
Other expense
(4
)
(1
)
(1
)
(3
)
Total other (expense) income
(18
)
(16
)
(58
)
(45
)
55
36
205
245
Provision for income taxes
(7
)
-
(58
)
(55
)
Equity in earnings of affiliated companies
3
3
12
11
Income from continuing operations
51
39
159
201
Income from discontinued operations, net of tax (A)
2
1
3
205
Net income
53
40
162
406
Net income attributable to noncontrolling interests
4
4
7
18
Net income attributable to Cabot Corporation
$
49
$
36
$
155
$
388
Continuing operations
$
0.73
$
0.54
$
2.34
$
2.83
Discontinued operations (A)
0.02
0.02
0.04
3.16
Net income attributable to Cabot Corporation
$
0.75
$
0.56
$
2.38
$
5.99
Weighted average common shares outstanding
Diluted
64.7
64.2
64.5
64.2
(A) Amounts relate primarily to the divesture of the Supermetals Business.
Fourth Quarter Earnings Announcement, Fiscal 2013
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
Periods ended September 30
Three Months
Twelve Months
Dollars in millions, except per share amounts (unaudited)
2013
2012
2013
2012
Sales
Reinforcement Materials
$
482
$
479
$
1,902
$
2,019
Performance Materials
232
227
904
914
Specialty Carbons and Compounds
158
159
622
664
Fumed Metal Oxides
74
68
282
250
Advanced Technologies
74
57
222
210
Inkjet Colorants
18
18
64
66
Aerogel
4
6
21
18
Security Materials
2
2
7
9
Elastomer Composites
12
6
29
23
Specialty Fluids
38
25
101
94
Purification Solutions (A)
90
61
348
61
Segment sales
878
824
3,376
3,204
Unallocated and other (B)
20
24
87
96
Net sales and other operating revenues
$
898
$
848
$
3,463
$
3,300
Segment Earnings Before Interest and Taxes (C) (D)
Reinforcement Materials
$
47
$
41
$
188
$
227
Performance Materials
33
34
132
128
Advanced Technologies
26
16
68
49
Purification Solutions (A)
(8
)
5
(4
)
5
Total Segment Earnings Before Interest and Taxes (D)
98
96
384
409
Unallocated and Other
Interest expense
(15
)
(16
)
(62
)
(46
)
Certain items (E)
(11
)
(30
)
(55
)
(51
)
Unallocated corporate costs (D)
(11
)
(12
)
(49
)
(56
)
General unallocated (expense) income (F)
(3
)
1
(1
)
-
Less: Equity in earnings of affiliated companies
(3
)
(3
)
(12
)
(11
)
55
36
205
245
Provision for income taxes (including tax certain items)
(7
)
-
(58
)
(55
)
Equity in earnings of affiliated companies
3
3
12
11
Income from continuing operations
51
39
159
201
Income from discontinued operations, net of tax (G)
2
1
3
205
Net income
53
40
162
406
Net income attributable to noncontrolling interests
4
4
7
18
Net income attributable to Cabot Corporation
$
49
$
36
$
155
$
388
Continuing operations
$
0.73
$
0.54
$
2.34
$
2.83
Discontinued operations (G)
0.02
0.02
0.04
3.16
Net income attributable to Cabot Corporation
$
0.75
$
0.56
$
2.38
$
5.99
Adjusted earnings per share
Adjusted EPS (H)
$
0.78
$
0.73
$
2.91
$
3.32
Weighted average common shares outstanding
Diluted
64.7
64.2
64.5
64.2
Fourth Quarter Earnings Announcement, Fiscal 2013
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
September 30,
September 30,
2013
2012
Dollars in millions
(unaudited)
(audited)
Current assets:
Cash and cash equivalents
$
95
$
120
Accounts and notes receivable, net of reserve for doubtful accounts of $8 and $5
638
687
Inventories:
Raw materials
102
131
Work in process
2
5
Finished goods
310
351
Other
44
46
Total inventories
458
533
Prepaid expenses and other current assets
56
71
Notes receivable from sale of business
214
-
Deferred income taxes
40
32
Total current assets
1,501
1,443
Property, plant and equipment, net
1,605
1,552
Goodwill
504
480
Equity affiliates
120
115
Intangible assets, net of accumulated amortization of $18 and $6
310
330
Assets held for rent
49
46
Notes receivable from sale of business
-
242
Deferred income taxes
109
94
Other assets
84
97
Total assets
$
4,282
$
4,399
Fourth Quarter Earnings Announcement, Fiscal 2013
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
September 30,
September 30,
2013
2012
Dollars in millions, except share and per share amounts
(unaudited)
(audited)
Current liabilities:
Notes payable
$
264
$
62
Accounts payable and accrued liabilities
535
606
Income taxes payable
31
59
Deferred income taxes
6
7
Current portion of long-term debt
14
185
Total current liabilities
850
919
Long-term debt
1,020
1,172
Deferred income taxes
62
55
Other liabilities
267
314
Stockholders' equity:
Preferred stock:
Authorized: 2,000,000 shares of $1 par value
Issued and Outstanding: None and none
—
—
Common stock:
Authorized: 200,000,000 shares of $1 par value
Issued: 64,223,985 and 63,600,928 shares
Outstanding: 63,970,502 and 63,347,362 shares
64
64
Less cost of 253,483 and 253,565 shares of common treasury stock
(8
)
(8
)
Additional paid-in capital
38
20
Retained earnings
1,758
1,653
Deferred employee benefits
(2
)
(8
)
Accumulated other comprehensive income
101
92
Total Cabot Corporation stockholders' equity
1,951
1,813
Noncontrolling interests
132
126
Total stockholders' equity
2,083
1,939
Total liabilities and stockholders' equity
$
4,282
$
4,399
CABOT CORPORATION
Fiscal 2012
Fiscal 2013
Dollars in millions,
except per share amounts (unaudited)
Dec. Q.
Mar. Q.
June Q.
Sept. Q.
FY
Dec. Q.
Mar. Q.
June Q.
Sept. Q.
FY
Sales
Reinforcement Materials
489
534
517
479
2,019
475
459
486
482
1,902
Performance Materials
205
235
247
227
914
196
243
233
232
904
Specialty Carbons and Compounds
151
173
181
159
664
132
173
159
158
622
Fumed Metal Oxides
54
62
66
68
250
64
70
74
74
282
Advanced Technologies
39
57
57
57
210
38
41
69
74
222
Inkjet Colorants
15
15
18
18
66
16
12
18
18
64
Aerogel
4
5
3
6
18
5
3
9
4
21
Security Materials
2
3
2
2
9
1
2
2
2
7
Elastomer Composites
4
7
6
6
23
8
4
5
12
29
Specialty Fluids
14
27
28
25
94
8
20
35
38
101
Purification Solutions (A)
-
-
-
61
61
93
79
86
90
348
Segment Sales
733
826
821
824
3,204
802
822
874
878
3,376
Unallocated and other (B)
29
18
25
24
96
18
20
29
20
87
Net sales and other operating revenues
$
762
$
844
$
846
$
848
$
3,300
$
820
$
842
$
903
$
898
$
3,463
Segment Earnings Before Interest and Taxes (C) (D)
Reinforcement Materials
55
72
59
41
227
50
42
49
47
188
Performance Materials
21
35
38
34
128
27
37
35
33
132
Advanced Technologies
5
16
12
16
49
7
8
27
26
68
Purification Solutions (A)
-
-
-
5
5
5
-
(1
)
(8
)
(4
)
Total Segment Earnings Before Interest and Taxes (D)
81
123
109
96
409
89
87
110
98
384
Unallocated and Other
Interest expense
(10
)
(9
)
(11
)
(16
)
(46
)
(16
)
(16
)
(15
)
(15
)
(62
)
Certain items (E)
(5
)
(9
)
(7
)
(30
)
(51
)
(20
)
(20
)
(4
)
(11
)
(55
)
Unallocated corporate costs (D)
(14
)
(18
)
(12
)
(12
)
(56
)
(12
)
(14
)
(12
)
(11
)
(49
)
General unallocated income (expense) (F)
4
(8
)
3
1
-
3
2
(3
)
(3
)
(1
)
Less: Equity in earnings of affiliated companies
(1
)
(3
)
(4
)
(3
)
(11
)
(3
)
(3
)
(3
)
(3
)
(12
)
Income from continuing operations before income taxes and
-
-
-
equity in earnings of affiliated companies
55
76
78
36
245
41
36
73
55
205
-
Provision for income taxes (including tax certain items)
(16
)
(23
)
(16
)
-
(55
)
(19
)
(16
)
(16
)
(7
)
(58
)
Equity in earnings of affiliated companies
1
3
4
3
11
3
3
3
3
12
-
Income from continuing operations
40
56
66
39
201
25
23
60
51
159
Income (loss) from discontinued operations, net of tax (G)
11
189
4
1
205
(1
)
-
2
2
3
Net income
51
245
70
40
406
24
23
62
53
162
Net income (loss) attributable to noncontrolling interests
5
5
4
4
18
4
(4
)
3
4
7
Net income attributable to Cabot Corporation
$
46
$
240
$
66
$
36
$
388
$
20
$
27
$
59
$
49
$
155
Continuing operations
$
0.55
$
0.78
$
0.96
$
0.54
$
2.83
$
0.33
$
0.42
$
0.86
$
0.73
$
2.34
Discontinued operations (G)
0.16
2.92
0.06
0.02
3.16
(0.02
)
-
0.04
0.02
0.04
Net income attributable to Cabot Corporation
$
0.71
$
3.70
$
1.02
$
0.56
$
5.99
$
0.31
$
0.42
$
0.90
$
0.75
$
2.38
Adjusted earnings per share
Adjusted EPS (H)
$
0.63
$
0.96
$
1.00
$
0.73
$
3.32
$
0.66
$
0.63
$
0.84
$
0.78
$
2.91
Weighted average common shares outstanding
Diluted
64.2
64.0
64.3
64.2
64.2
64.1
64.4
64.5
64.7
64.5
Fourth Quarter Earnings Announcement, Fiscal 2013
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND OPERATING TAX RATE
TABLE 1: DETAIL OF CERTAIN ITEMS
Periods ended September 30
Three Months
Twelve Months
Three Months
Twelve Months
Dollars in millions, except per share amounts (unaudited)
Dollars in Millions
Per Share After Tax
2013
2012
2013
2012
2013
2012
2013
2012
$
$
$
$
per share(A)
per share(A)
per share(A)
per share(A)
Global restructuring activities
$
(7
)
$
(3
)
$
(37
)
$
(17
)
$
(0.04
)
$
(0.04
)
$
(0.36
)
$
(0.24
)
Acquisition related charges
(3
)
(21
)
(21
)
(26
)
(0.05
)
(0.23
)
(0.24
)
(0.32
)
Environmental and legal reserves
(1
)
(6
)
(1
)
(8
)
(0.01
)
(0.07
)
(0.01
)
(0.09
)
Foreign currency gain on revaluations
—
—
4
—
—
—
0.05
—
Certain items before tax
(11
)
(30
)
(55
)
(51
)
(0.10
)
(0.34
)
(0.56
)
(0.65
)
Tax impact of certain items
5
7
10
9
Certain items after tax
(6
)
(23
)
(45
)
(42
)
(0.10
)
(0.34
)
(0.56
)
(0.65
)
Tax-related certain items
Tax impact of certain foreign exchange gains (losses)
—
3
(12
)
1
—
0.06
(0.19
)
0.02
Tax impact of non deductible interest expense
—
(2
)
—
(2
)
—
(0.03
)
—
(0.03
)
Discrete tax items
2
9
11
11
0.05
0.12
0.18
0.17
Total tax-related certain items
2
10
(1
)
10
0.05
0.15
(0.01
)
0.16
Total certain items after tax
(4
)
(13
)
(46
)
(32
)
(0.05
)
(0.19
)
(0.57
)
(0.49
)
Discontinued operations after income taxes (B)
2
1
3
205
0.02
0.02
0.04
3.16
Total discontinued operations after tax
$
2
$
1
$
3
$
205
$
0.02
$
0.02
$
0.04
$
3.16
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE ITEM
Periods ended September 30
Three Months
Twelve Months
Dollars in millions, Pre-Tax (unaudited)
2013
2012
2013
2012
Cost of sales
$
(3
)
$
(11
)
$
(38
)
$
(25
)
Selling and administrative expenses
(7
)
(18
)
(17
)
(25
)
Research and technical expenses
—
—
(2
)
—
Other
(1
)
(1
)
2
(1
)
Total certain items
$
(11
)
$
(30
)
$
(55
)
$
(51
)
TABLE 3: RECONCILIATION OF TAX CERTAIN ITEMS
Periods ended September 30
Three Months
Twelve Months
Dollars in millions (unaudited)
2013
2012
2013
2012
Provision for income taxes
$
(7
)
$ ―
$
(58
)
$
(55
)
Less: Tax impact of certain items
5
7
10
9
Less: Tax related certain items
2
10
(1
)
10
Provision for income taxes, excluding certain items
$
(14
)
$
(17
)
$
(67
)
$
(74
)
TABLE 4: RECONCILIATION OF OPERATING TAX RATE
Periods ended September 30
Three Months
Twelve Months
Dollars in millions (unaudited)
2013
2012
2013
2012
Provision for income taxes
$
(7
)
$ ―
$
(58
)
$
(55
)
Effective tax rate
13
%
1
%
28
%
22
%
Impact of discrete tax items:
Unusual or infrequent items
1
%
20
%
(3
%)
3
%
Items related to uncertain tax positions
6
%
1
%
2
%
1
%
Other discrete tax items
(1
%)
2
%
1
%
-
%
Impact of certain items
5
%
1
%
(2
%)
(1
%)
Operating tax rate
24
%
25
%
26
%
25
%
TABLE 5: RECONCILIATION OF ADJUSTED EPS BY QUARTER FISCAL 2012 and FISCAL 2013
NON-GAAP MEASURE:
Fiscal 2012(A)
Fiscal 2013(A)
Periods ended (unaudited)
Jun. Q
Sept. Q
FY 2012 YTD
Dec. Q
Mar. Q
Jun. Q
Sept. Q
FY 2013 YTD
Net income per share attributable to Cabot Corporation
$
1.02
$
0.56
$
5.99
$
0.31
$
0.42
$
0.90
$
0.75
$
2.38
Less: Net income (loss) per share from discontinued operations(B)
0.06
0.02
3.16
(0.02
)
-
0.04
0.02
0.04
Net income per share from continuing operations
$
0.96
$
0.54
$
2.83
$
0.33
$
0.42
$
0.86
$
0.73
$
2.34
Less: Certain items after tax
(0.04
)
(0.19
)
(0.49
)
(0.33
)
(0.21
)
0.02
(0.05
)
(0.57
)
Adjusted earnings per share
$
1.00
$
0.73
$
3.32
$
0.66
$
0.63
$
0.84
$
0.78
$
2.91
Contacts
Investor Contact:
Cabot Corporation
Erica McLaughlin, 617-342-6090
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