Cabot Corp 10-Q for FY2022 Q1

Cabot Corp (CBT)

10-Q 2022-02-04 For: 2021-12-31

Added on April 10, 2026

About this 10-Q

Cabot Corp filed this 10-Q on February 4, 2022, covering the quarter ended December 31, 2021 (FY2022 Q1).

Headline figures

Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $968M; up 29.8% from $746M a year earlier
Net loss: $89M; compared with net income of $60M a year earlier
Diluted EPS: -$1.57; compared with $1.06 a year earlier

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Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value per share	CBT	The New York Stock Exchange

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

Part I.	Financial Information

	Item 1.	Financial Statements (unaudited)
		Consolidated Statements of Operations	3
		Consolidated Statements of Comprehensive Income (Loss)	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Cash Flows	7
		Consolidated Statements of Changes in Stockholders’ Equity	8
		Notes to the Consolidated Financial Statements	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
	Item 4.	Controls and Procedures	31

Part II.	Other Information
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 6.	Exhibits	33

	Three Months Ended December 31
	2021			2020
	(In millions, except per share amounts)
Net sales and other operating revenues	$	968		$	746
Cost of sales		770			553
Gross profit		198			193
Selling and administrative expenses		71			61
Research and technical expenses		13			14
Purification Solutions assets held for sale impairment charge (Note D)		197			—
Income (loss) from operations		(83	)		118
Interest and dividend income		3			2
Interest expense		(12	)		(12	)
Other income (expense)		(1	)		(9	)
Income (loss) before income taxes and equity in earnings of affiliated companies		(93	)		99
(Provision) benefit for income taxes		12			(29	)
Equity in earnings of affiliated companies, net of tax		1			—
Net income (loss)		(80	)		70
Net income (loss) attributable to noncontrolling interests, net of tax		9			10
Net income (loss) attributable to Cabot Corporation	$	(89	)	$	60

Weighted-average common shares outstanding:
Basic		56.8			56.5
Diluted		56.8			56.6

Earnings (loss) per common share:
Basic	$	(1.57	)	$	1.06
Diluted	$	(1.57	)	$	1.06

	Three Months Ended December 31
	2021			2020
	(In millions)
Net income (loss)	$	(80	)	$	70
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment, net of tax		(28	)		94
Derivatives: net investment hedges
(Gains) losses reclassified to interest expense, net of tax		(1	)		(1	)
Pension and other postretirement benefit liability adjustments, net of tax		1			3
Other comprehensive income (loss), net of tax of $— and $(3)		(28	)		96
Comprehensive income (loss)		(108	)		166
Net income (loss) attributable to noncontrolling interests, net of tax		9			10
Foreign currency translation adjustment attributable to noncontrolling interests, net of tax		2			7
Comprehensive income (loss) attributable to noncontrolling interests		11			17
Comprehensive income (loss) attributable to Cabot Corporation	$	(119	)	$	149

	December 31, 2021		September 30, 2021
	(In millions)
Current assets:
Cash and cash equivalents	$	179	$	168
Accounts and notes receivable, net of reserve for doubtful accounts of $4 and $4		660		645
Inventories:
Raw materials		154		168
Finished goods		341		300
Other		51		55
Total inventories		546		523
Prepaid expenses and other current assets		113		89
Assets held for sale		111		—
Total current assets		1,609		1,425
Property, plant and equipment, net		1,267		1,376
Goodwill		140		140
Equity affiliates		14		40
Intangible assets, net		70		100
Deferred income taxes		57		53
Other assets		158		172
Total assets	$	3,315	$	3,306

	December 31, 2021			September 30, 2021
	(In millions, except share
	and per share amounts)
Current liabilities:
Short-term borrowings	$	226		$	72
Accounts payable and accrued liabilities		620			667
Income taxes payable		37			35
Current portion of long-term debt		373			373
Liabilities held for sale		71			—
Total current liabilities		1,327			1,147
Long-term debt		714			717
Deferred income taxes		73			73
Other liabilities		253			279
Contingencies (Note H)
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: 56,723,411 and 56,870,237 shares, Outstanding: 56,579,992 and 56,726,818 shares		57			57
Less cost of 143,419 and 143,419 shares of common treasury stock		(4	)		(4	)
Additional paid-in capital		11			24
Retained earnings		1,049			1,159
Accumulated other comprehensive income (loss)		(319	)		(289	)
Total Cabot Corporation stockholders' equity		794			947
Noncontrolling interests		154			143
Total stockholders' equity		948			1,090
Total liabilities and stockholders' equity	$	3,315		$	3,306

	December 31, 2021		December 31, 2020
	(In millions)
Cash and cash equivalents	$	179	$	147
Restricted cash classified within Prepaid expenses and other current assets		1		—
Cash, cash equivalents and restricted cash	$	180	$	147

	Common Stock, Net of Treasury Stock					Additional Paid-in			Retained			Accumulated Other Comprehensive			Total Cabot Corporation Stockholders’			Noncontrolling		Total Stockholders’
	Shares			Cost		Capital			Earnings			Income (Loss)			Equity			Interests		Equity
	(In millions, except share amounts)
Balance at September 30, 2021		56,727		$	53	$	24		$	1,159		$	(289	)	$	947		$	143	$	1,090
Net income (loss)										(89	)					(89	)		9		(80	)
Total other comprehensive income (loss)													(30	)		(30	)		2		(28	)
Cash dividends paid:
Common stock, $0.37 per share										(21	)					(21	)				(21	)
Issuance of stock under equity compensation plans		202			—		—									—					—
Amortization of share-based compensation							6									6					6
Purchase and retirement of common stock		(349	)		—		(19	)		—						(19	)				(19	)
Balance at December 31, 2021		56,580		$	53	$	11		$	1,049		$	(319	)	$	794		$	154	$	948

	(In millions)
Assets
Accounts and notes receivable, net of reserve for doubtful accounts	$	37
Inventories		67
Prepaid expenses and other current assets		2
Property, plant and equipment, net		106
Equity affiliates		28
Intangible assets, net		27
Deferred income taxes		31
Other assets		10
Total assets held for sale		308
Impairment of assets held for sale		(197	)
Adjusted assets held for sale	$	111

Liabilities
Short-term borrowings	$	(2	)
Accounts payable and accrued liabilities		(51	)
Income taxes payable		(1	)
Long-term debt		(17	)
Total liabilities assumed		(71	)
Total net assets held for sale	$	40

	Reinforcement Materials		Performance Chemicals		Total
	(In millions)
Balance at September 30, 2021	$	48	$	92	$	140
Foreign currency impact		—		—		—
Balance at December 31, 2021	$	48	$	92	$	140

	December 31, 2021							September 30, 2021
	Gross Carrying Value		Accumulated Amortization			Net Intangible Assets		Gross Carrying Value		Accumulated Amortization			Net Intangible Assets
	(In millions)
Intangible assets with finite lives
Developed technologies⁽¹⁾	$	36	$	(7	)	$	29	$	62	$	(12	)	$	50
Trademarks⁽¹⁾		2		—			2		11		(1	)		10
Customer relationships		60		(21	)		39		60		(20	)		40
Total intangible assets	$	98	$	(28	)	$	70	$	133	$	(33	)	$	100

	Currency Translation Adjustment			Pension and Other Postretirement Benefit Liability Adjustments			Total
	(In millions)
Balance at September 30, 2021, attributable to Cabot Corporation	$	(265	)	$	(24	)	$	(289	)
Other comprehensive income (loss) before reclassifications		(28	)		1			(27	)
Amounts reclassified from AOCI		(1	)		—			(1	)
Less: Other comprehensive income (loss) attributable to noncontrolling interests		2			—			2
Balance at December 31, 2021, attributable to Cabot Corporation	$	(296	)	$	(23	)	$	(319	)

	Affected Line Item in the Consolidated	Three Months Ended December 31
	Statements of Operations	2021			2020
		(In millions)
Derivatives: net investment hedges
(Gains) losses reclassified to interest expense	Interest expense	$	(1	)	$	(1	)
Pension and other postretirement
Amortization of actuarial losses and prior service cost (credit)	Net Periodic Benefit Cost (Note E)		—			1
Settlement charge	Net Periodic Benefit Cost (Note E)		—			6
Total before tax		$	(1	)	$	6

	Severance and Employee Benefits			Environmental Remediation		Total
	(In millions)
Reserve at September 30, 2021	$	5		$	4	$	9
Charges (gain)		2			—		2
Cash paid		(2	)		—		(2	)
Reserve at December 31, 2021	$	5		$	4	$	9

Level 1	—	Quoted market prices in active markets for identical assets or liabilities

Level 2	—	Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs)

Level 3	—	Significant unobservable inputs

		Notional Amount
Description	Borrowing	December 31, 2021	September 30, 2021	Hedge Designation
Cross-Currency Swaps	3.4% Notes	USD 250 million swapped to EUR 223 million	USD 250 million swapped to EUR 223 million	Net investment
Forward Foreign Currency Contracts ⁽¹⁾	N/A	USD 36 million	USD 48 million	No designation

	Reinforcement Materials		Performance Chemicals		Purification Solutions			Segment Total		Unallocated and Other⁽¹⁾			Consolidated Total
	(In millions)
Three Months Ended December 31, 2021
Revenues from external customers⁽²⁾	$	541	$	302	$	61		$	904	$	64		$	968
Income (loss) before income taxes⁽³⁾	$	85	$	52	$	—		$	137	$	(230	)	$	(93	)

Three Months Ended December 31, 2020
Revenues from external customers⁽²⁾	$	375	$	267	$	59		$	701	$	45		$	746
Income (loss) before income taxes⁽³⁾	$	88	$	54	$	(2	)	$	140	$	(41	)	$	99

Period	Total Number of Shares Purchased⁽¹⁾⁽²⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs⁽¹⁾
October 1, 2021 - October 31, 2021		—	$	—		—		5,023,665
November 1, 2021 - November 30, 2021		—	$	—		—		5,023,665
December 1, 2021 - December 31, 2021		286,391	$	55.87		286,391		4,737,274
Total		286,391				286,391

Exhibit No.		Description

Exhibit 3.1		Restated Certificate of Incorporation of Cabot Corporation effective January 9, 2009 (incorporated herein by reference to Exhibit 3.1 of Cabot’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2008, file reference 1-5667, filed with the SEC on February 9, 2009).

Exhibit 3.2		The By-laws of Cabot Corporation as amended January 7, 2021 (incorporated herein by reference to Exhibit 3.1 of Cabot Corporation’s Current Report on Form 8-K, file reference 1-5667, filed with the SEC on January 12, 2021).

Exhibit 31.1*		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

Exhibit 31.2*		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

Exhibit 32**		Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.

Exhibit 101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 104*		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, formatted in Inline XBRL (included in Exhibit 101).

	CABOT CORPORATION

Date: February 4, 2022	By:	/s/ Erica McLaughlin
		Erica McLaughlin
		Senior Vice President and Chief Financial Officer
		(Duly Authorized Officer)


Date: February 4, 2022	By:	/s/ Lisa m. Dumont
		Lisa M. Dumont
		Vice President and Controller (Chief Accounting Officer)