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Cabot Corporation (CBT - Free Report) incurred a loss of $89 million or $1.57 per share loss in the first quarter of fiscal 2022 (ended Dec 31, 2021) against a profit of $60 million or $1.06 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) were $1.29 in the reported quarter, up from $1.18 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.06.
Net sales increased around 30% year over year to $968 million. The metric also surpassed the Zacks Consensus Estimate of $815.2 million.
Segment Highlights
Reinforcement Materials’ sales increased 44.3% year over year to $541 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $85 million, down 3.4%. The decrease in EBIT was led by higher costs associated with utilities and maintenance.
Sales in the Performance Chemicals unit went up around 13.1% year over year to $302 million in the quarter. EBIT decreased 3.7% to $52 million, primarily due to lower volumes across both Performance Additives and Formulated Solutions brought about by plant downtimes in the company’s fumed metal oxides and specialty compounds product lines.
Sales in Purification Solutions increased 3.4% year over year to $61 million in the quarter. The EBIT in the segment increased $2 million in the reported quarter. The increase largely stemmed from lower fixed costs. During the first quarter of fiscal 2022, an agreement was reached to divest the business. The transaction is expected to close in the second quarter of fiscal 2022.
Financial Position
Cabot had cash and cash equivalents of $179 million, up 21.8% from the prior year’s level. The company’s long-term debt fell 34.2% to $714 million from $1,085 million.
Cash used from operating activities was $49 million in the quarter compared with cash flow of $21 million in the prior-year quarter.
Outlook
Cabot expects continued strong end-market demand and benefits from growth investments. Looking ahead to the balance of 2022, Reinforcement Materials is expected to benefit from the customer agreements in the year. Growth in demand is anticipated for the Performance Chemicals segment, along with strength in battery materials and inkjet packaging. The company is on track with its long-term guidance to generate more than $1 billion during the next three years and expects a strong free cash flow to fund high-growth investments. It is also committed to returning capital to shareholders through dividends and share repurchases. Based on the positive outlook and strong fiscal first-quarter performance, it has raised its adjusted earnings per share outlook for fiscal 2022 to the range of $5.50-$5.90 from the previous view of $5.20-$5.60.
For the second quarter of fiscal 2022, it also expects demand improvement across all its key product lines and a boost in profitability.
AdvanSix has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.3% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in all the four trailing quarters with an earnings surprise of 47%, on average. ASIX’s shares have also surged 88.8% over a year.
Albemarle has an expected earnings growth rate of 51.3% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.4% upward over the past 60 days.
Albemarle beat the Zacks Consensus Estimate for earnings in all the four trailing quarters with an earnings surprise of 22.05%, on average. ALB’s shares have also surged 32.7% over a year.
Huntsman has an expected earnings growth rate of 10.1% for the current year. The Zacks Consensus Estimate for the current year has been revised 0.8% upward over the past 60 days.
Huntsman beat the Zacks Consensus Estimate for earnings in all of the four trailing quarters and pulled off an earnings surprise of 12.83%, on average. Shares of HUN have rallied around 32.3% over a year.
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Cabot (CBT) Beats on Q1 Earnings & Sales, Raises FY22 Guidance
Cabot Corporation (CBT - Free Report) incurred a loss of $89 million or $1.57 per share loss in the first quarter of fiscal 2022 (ended Dec 31, 2021) against a profit of $60 million or $1.06 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) were $1.29 in the reported quarter, up from $1.18 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.06.
Net sales increased around 30% year over year to $968 million. The metric also surpassed the Zacks Consensus Estimate of $815.2 million.
Segment Highlights
Reinforcement Materials’ sales increased 44.3% year over year to $541 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $85 million, down 3.4%. The decrease in EBIT was led by higher costs associated with utilities and maintenance.
Sales in the Performance Chemicals unit went up around 13.1% year over year to $302 million in the quarter. EBIT decreased 3.7% to $52 million, primarily due to lower volumes across both Performance Additives and Formulated Solutions brought about by plant downtimes in the company’s fumed metal oxides and specialty compounds product lines.
Sales in Purification Solutions increased 3.4% year over year to $61 million in the quarter. The EBIT in the segment increased $2 million in the reported quarter. The increase largely stemmed from lower fixed costs. During the first quarter of fiscal 2022, an agreement was reached to divest the business. The transaction is expected to close in the second quarter of fiscal 2022.
Financial Position
Cabot had cash and cash equivalents of $179 million, up 21.8% from the prior year’s level. The company’s long-term debt fell 34.2% to $714 million from $1,085 million.
Cash used from operating activities was $49 million in the quarter compared with cash flow of $21 million in the prior-year quarter.
Outlook
Cabot expects continued strong end-market demand and benefits from growth investments. Looking ahead to the balance of 2022, Reinforcement Materials is expected to benefit from the customer agreements in the year. Growth in demand is anticipated for the Performance Chemicals segment, along with strength in battery materials and inkjet packaging. The company is on track with its long-term guidance to generate more than $1 billion during the next three years and expects a strong free cash flow to fund high-growth investments. It is also committed to returning capital to shareholders through dividends and share repurchases. Based on the positive outlook and strong fiscal first-quarter performance, it has raised its adjusted earnings per share outlook for fiscal 2022 to the range of $5.50-$5.90 from the previous view of $5.20-$5.60.
For the second quarter of fiscal 2022, it also expects demand improvement across all its key product lines and a boost in profitability.
Zacks Rank & Key Picks
Cabot currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks from the basic materials space include AdvanSix Inc. (ASIX - Free Report) and Albemarle Corporation (ALB - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Huntsman Corporation (HUN - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AdvanSix has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.3% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in all the four trailing quarters with an earnings surprise of 47%, on average. ASIX’s shares have also surged 88.8% over a year.
Albemarle has an expected earnings growth rate of 51.3% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.4% upward over the past 60 days.
Albemarle beat the Zacks Consensus Estimate for earnings in all the four trailing quarters with an earnings surprise of 22.05%, on average. ALB’s shares have also surged 32.7% over a year.
Huntsman has an expected earnings growth rate of 10.1% for the current year. The Zacks Consensus Estimate for the current year has been revised 0.8% upward over the past 60 days.
Huntsman beat the Zacks Consensus Estimate for earnings in all of the four trailing quarters and pulled off an earnings surprise of 12.83%, on average. Shares of HUN have rallied around 32.3% over a year.