Cabot Corp Reports Third Quarter Adjusted EPS of $0.84 and Diluted EPS of $0.90
Third quarter adjusted EPS improved 33% sequentially as volumes recover
Key Highlights
- Total Segment EBIT increased 25% sequentially and 2% year over year as demand improved in many of our end markets
- Record Advanced Technologies segment operating results
-
Reduced net working capital by
$30 million and reduced debt by$61 million -
Acquisition of NHUMO will help strengthen the company’s position in
North America
(In millions, except per share amounts) | Fiscal 2013 | Fiscal 2012 | ||||||||||
Third | First | Third | First | |||||||||
Quarter |
9 Months |
Quarter |
9 Months |
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Net sales | $ | 903 | $ | 2,565 | $ | 846 | $ | 2,452 | ||||
Net income attributable to Cabot Corporation | $ | 59 | $ | 106 | $ | 66 | $ | 352 | ||||
Net earnings per share attributable to Cabot Corporation | $ | 0.90 | $ | 1.63 | $ | 1.02 | $ | 5.43 | ||||
Less Adjustments: | ||||||||||||
Net income per share from discontinued operations | $ | 0.04 | $ | 0.02 | $ | 0.06 | $ | 3.14 | ||||
Certain items per share | $ | 0.02 | $ | (0.52) | $ | (0.04) | $ | (0.30) | ||||
Adjusted EPS | $ | 0.84 | $ | 2.13 | $ | 1.00 | $ | 2.59 | ||||
Commenting on the results, Cabot President and CEO
Prevost, continued, “This was our first quarter of broadly improving
volumes since early 2011. The restructuring activities we previously
announced in Advanced Technologies are contributing positively to the
results. This quarter, we announced the closure of our carbon black
facility in
Financial Detail
For the third quarter of fiscal 2013, net income attributable to
Total Segment EBIT for the third quarter of fiscal 2013 was
Segment Results
Reinforcement Materials -- Third quarter fiscal 2013 EBIT in
Reinforcement Materials decreased by
Global and regional volume changes for Reinforcement Materials for the third quarter of fiscal 2013 as compared to the same quarter of the prior year and the second quarter of fiscal 2013 are included in the table below:
Third Quarter Year over Year Change |
Third Quarter Sequential Change |
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Global | 4% | 8% | ||
Japan | 5% | 16% | ||
Southeast Asia | (22%) | (1%) | ||
China | 16% | 19% | ||
Europe, Middle East, Africa | 10% | 1% | ||
North America | - | 2% | ||
South America | 4% | 8% | ||
Performance Materials -- Third quarter fiscal 2013 EBIT in
Performance Materials decreased by
Advanced Technologies -- For the third quarter of fiscal 2013,
EBIT in Advanced Technologies increased by
Purification Solutions -- On
Stand-alone Purification Solutions financial results, excluding purchase
accounting impacts, for the quarter ended
Cash Performance -- The Company ended the third quarter of fiscal
2013 with a cash balance of
Taxes -- During the third quarter of fiscal 2013, the Company
recorded a net tax provision of
Outlook
“We are pleased with the recent positive demand trends in a number of
our end markets around the globe and we remain well positioned to
capture volume growth,” Prevost said, commenting on the outlook for the
Company. “The tire industry is showing signs of improvements in
Earnings Call
The Company will host a conference call with industry analysts at
About
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, and demand for our products, including when we expect
demand to recover and expectations for growth, and Cabot’s expectations
pertaining to the completion of the acquisition of the equity interest
in Nhumo that we do not currently own and the benefits we expect to
receive from the acquisition and Cabot’s future financial performance,
including 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 changes in raw material costs; 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
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); 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
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 “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 third quarter of fiscal 2013 is provided on the investor portion of our website at http://investor.cabot-corp.com, under the Non-GAAP Reconciliations section.
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CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS |
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Periods ended June 30 | Three Months | Nine Months | ||||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales and other operating revenues | $ | 903 | $ | 846 | $ | 2,565 | $ | 2,452 | ||||||||
Cost of sales | 726 | 671 | 2,097 | 1,961 | ||||||||||||
Gross profit | 177 | 175 | 468 | 491 | ||||||||||||
Selling and administrative expenses | 73 | 68 | 223 | 199 | ||||||||||||
Research and technical expenses | 18 | 17 | 55 | 54 | ||||||||||||
Income from operations | 86 | 90 | 190 | 238 | ||||||||||||
Other (expense) income | ||||||||||||||||
Interest and dividend income | 2 | 1 | 4 | 3 | ||||||||||||
Interest expense | (15 | ) | (11 | ) | (47 | ) | (30 | ) | ||||||||
Other (expense) income | - | (2 | ) | 3 | (2 | ) | ||||||||||
Total other (expense) income | (13 | ) | (12 | ) | (40 | ) | (29 | ) | ||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
73 | 78 | 150 | 209 | ||||||||||||
Provision for income taxes | (16 | ) | (16 | ) | (51 | ) | (55 | ) | ||||||||
Equity in earnings of affiliated companies | 3 | 4 | 9 | 8 | ||||||||||||
Income from continuing operations | 60 | 66 | 108 | 162 | ||||||||||||
Income from discontinued operations, net of tax (A) | 2 | 4 | 1 | 204 | ||||||||||||
Net income | 62 | 70 | 109 | 366 | ||||||||||||
Net income attributable to noncontrolling interests | 3 | 4 | 3 | 14 | ||||||||||||
Net income attributable to Cabot Corporation | $ | 59 | $ | 66 | $ | 106 | $ | 352 | ||||||||
Diluted earnings per share of common stock attributable to Cabot Corporation |
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Continuing operations | $ | 0.86 | $ | 0.96 | $ | 1.61 | $ | 2.29 | ||||||||
Discontinued operations (A) | 0.04 | 0.06 | 0.02 | 3.14 | ||||||||||||
Net income attributable to Cabot Corporation | $ | 0.90 | $ | 1.02 | $ | 1.63 | $ | 5.43 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Diluted | 64.5 | 64.3 | 64.3 | 64.2 | ||||||||||||
(A) Amounts relate to the divesture of the Supermetals Business. | ||||||||||||||||
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CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS | ||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | ||||||||||||||||
Dollars in millions, except per share amounts (unaudited) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
Sales | ||||||||||||||||||
Reinforcement Materials | $ | 486 | $ | 517 | $ | 1,420 | $ | 1,540 | ||||||||||
Performance Materials | 233 | 247 | 672 | 687 | ||||||||||||||
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Specialty Carbons and Compounds |
159 | 181 | 464 | 505 | |||||||||||||
|
Fumed Metal Oxides |
74 | 66 | 208 | 182 | |||||||||||||
Advanced Technologies | 69 | 57 | 148 | 153 | ||||||||||||||
|
Inkjet Colorants |
18 | 18 | 46 | 48 | |||||||||||||
|
Aerogel |
9 | 3 | 17 | 12 | |||||||||||||
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Security Materials |
2 | 2 | 5 | 7 | |||||||||||||
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Elastomer Composites |
5 | 6 | 17 | 17 | |||||||||||||
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Specialty Fluids |
35 | 28 | 63 | 69 | |||||||||||||
Purification Solutions (A) | 86 | - | 258 | - | ||||||||||||||
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Segment sales |
874 | 821 | 2,498 | 2,380 | |||||||||||||
Unallocated and other (B) | 29 | 25 | 67 | 72 | ||||||||||||||
|
Net sales and other operating revenues |
$ | 903 | $ | 846 | $ | 2,565 | $ | 2,452 | |||||||||
Segment Earnings Before Interest and Taxes | ||||||||||||||||||
Reinforcement Materials | $ | 48 | $ | 59 | $ | 139 | $ | 186 | ||||||||||
Performance Materials | 35 | 38 | 98 | 94 | ||||||||||||||
Advanced Technologies | 27 | 12 | 42 | 33 | ||||||||||||||
Purification Solutions (A) | 1 | - | 11 | - | ||||||||||||||
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Total Segment Earnings Before Interest and Taxes (C) |
111 | 109 | 290 | 313 | |||||||||||||
Unallocated and Other | ||||||||||||||||||
Interest expense | (15 | ) | (11 | ) | (47 | ) | (30 | ) | ||||||||||
Certain items (D) | (4 | ) | (7 | ) | (44 | ) | (21 | ) | ||||||||||
Unallocated corporate costs | (13 | ) | (12 | ) | (42 | ) | (44 | ) | ||||||||||
General unallocated (expense) income (E) | (3 | ) | 3 | 2 | (1 | ) | ||||||||||||
Less: Equity in earnings of affiliated companies | (3 | ) | (4 | ) | (9 | ) | (8 | ) | ||||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
73 | 78 | 150 | 209 | ||||||||||||||
Provision for income taxes (including tax certain items) | (16 | ) | (16 | ) | (51 | ) | (55 | ) | ||||||||||
Equity in earnings of affiliated companies | 3 | 4 | 9 | 8 | ||||||||||||||
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Income from continuing operations |
60 | 66 | 108 | 162 | |||||||||||||
Income from discontinued operations, net of tax (F) | 2 | 4 | 1 | 204 | ||||||||||||||
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Net income |
62 | 70 | 109 | 366 | |||||||||||||
Net income attributable to noncontrolling interests | 3 | 4 | 3 | 14 | ||||||||||||||
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Net income attributable to Cabot Corporation |
$ | 59 | $ | 66 | $ | 106 | $ | 352 | |||||||||
Diluted earnings per share of common stock attributable to Cabot Corporation |
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Continuing operations |
$ | 0.86 | $ | 0.96 | $ | 1.61 | $ | 2.29 | |||||||||
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Discontinued operations (F) |
0.04 | 0.06 | 0.02 | 3.14 | |||||||||||||
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Net income attributable to Cabot Corporation |
$ | 0.90 | $ | 1.02 | $ | 1.63 | $ | 5.43 | |||||||||
Adjusted earnings per share | ||||||||||||||||||
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Adjusted EPS (G) |
$ | 0.84 | $ | 1.00 | $ | 2.13 | $ | 2.59 | |||||||||
Weighted average common shares outstanding | ||||||||||||||||||
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Diluted |
64.5 | 64.3 | 64.3 | 64.2 | |||||||||||||
(A) |
The Company acquired Norit N.V. on July 31, 2012, which became Cabot's Purification Solutions. Accordingly, there are no results reported for Purification Solutions for the third quarter and first nine months of fiscal 2012. For the third quarter and first nine months of fiscal 2013, the Segment EBIT amounts do not include an allocation of costs to the Purification Solutions segment for corporate administrative and functional support. As we continue the integration of this business and identify synergies and determine the functional costs to be appropriately allocated, we expect an allocation of these costs will be determined and made in the fourth quarter of fiscal 2013. These allocations are not expected to exceed $10 million for the full fiscal year 2013, and are currently reflected in Unallocated corporate costs and other segment results. |
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(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) | Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. | |||||||||||||||||
(E) | 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. | |||||||||||||||||
(F) | Amounts relate to the divesture of the Supermetals business. | |||||||||||||||||
(G) | 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. | |||||||||||||||||
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CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||
June 30, | September 30, | |||||
2013 | 2012 | |||||
Dollars in millions | (unaudited) | (audited) | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 76 | $ | 120 | ||
Accounts and notes receivable, net of reserve for doubtful accounts of $8 and $5 | 696 | 687 | ||||
Inventories: | ||||||
Raw materials | 126 | 131 | ||||
Work in process | 3 | 5 | ||||
Finished goods | 349 | 351 | ||||
Other | 44 | 46 | ||||
Total inventories | 522 | 533 | ||||
Prepaid expenses and other current assets | 57 | 71 | ||||
Notes receivable from sale of business | 214 | - | ||||
Deferred income taxes | 38 | 32 | ||||
Total current assets | 1,603 | 1,443 | ||||
Property, plant and equipment, net | 1,567 | 1,552 | ||||
Goodwill | 499 | 480 | ||||
Equity affiliates | 116 | 115 | ||||
Intangible assets, net of accumulated amortization of $14 and $6 | 310 | 330 | ||||
Assets held for rent | 51 | 46 | ||||
Notes receivable from sale of business | - | 242 | ||||
Deferred income taxes | 103 | 94 | ||||
Other assets | 90 | 97 | ||||
Total assets | $ | 4,339 | $ | 4,399 | ||
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CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||
June 30, | September 30, | |||||||
2013 | 2012 | |||||||
Dollars in millions, except share and per share amounts | (unaudited) | (audited) | ||||||
Current liabilities: | ||||||||
Notes payable | $ | 259 | $ | 62 | ||||
Accounts payable and accrued liabilities | 518 | 606 | ||||||
Income taxes payable | 19 | 59 | ||||||
Deferred income taxes | 6 | 7 | ||||||
Current portion of long-term debt | 185 | 185 | ||||||
Total current liabilities | 987 | 919 | ||||||
Long-term debt | 1,008 | 1,172 | ||||||
Deferred income taxes | 59 | 55 | ||||||
Other liabilities | 284 | 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: 64,108,518 and 63,600,928 shares | ||||||||
Outstanding: 63,854,953 and 63,347,362 shares | 64 | 64 | ||||||
Less cost of 253,565 and 253,565 shares of common treasury stock | (8 | ) | (8 | ) | ||||
Additional paid-in capital | 32 | 20 | ||||||
Retained earnings | 1,720 | 1,653 | ||||||
Deferred employee benefits | (3 | ) | (8 | ) | ||||
Accumulated other comprehensive income | 70 | 92 | ||||||
Total Cabot Corporation stockholders' equity | 1,875 | 1,813 | ||||||
Noncontrolling interests | 126 | 126 | ||||||
Total stockholders' equity | 2,001 | 1,939 | ||||||
Total liabilities and stockholders' equity | $ | 4,339 | $ | 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 | - | 1,420 | ||||||||||||||||||||||||||||||
Performance Materials | 205 | 235 | 247 | 227 | 914 | 196 | 243 | 233 | - | 672 | ||||||||||||||||||||||||||||||
Specialty Carbons and Compounds | 151 | 173 | 181 | 159 | 664 | 132 | 173 | 159 | - | 464 | ||||||||||||||||||||||||||||||
Fumed Metal Oxides | 54 | 62 | 66 | 68 | 250 | 64 | 70 | 74 | - | 208 | ||||||||||||||||||||||||||||||
Advanced Technologies | 39 | 57 | 57 | 57 | 210 | 38 | 41 | 69 | - | 148 | ||||||||||||||||||||||||||||||
Inkjet Colorants | 15 | 15 | 18 | 18 | 66 | 16 | 12 | 18 | - | 46 | ||||||||||||||||||||||||||||||
Aerogel | 4 | 5 | 3 | 6 | 18 | 5 | 3 | 9 | - | 17 | ||||||||||||||||||||||||||||||
Security Materials | 2 | 3 | 2 | 2 | 9 | 1 | 2 | 2 | - | 5 | ||||||||||||||||||||||||||||||
Elastomer Composites | 4 | 7 | 6 | 6 | 23 | 8 | 4 | 5 | - | 17 | ||||||||||||||||||||||||||||||
Specialty Fluids | 14 | 27 | 28 | 25 | 94 | 8 | 20 | 35 | - | 63 | ||||||||||||||||||||||||||||||
Purification Solutions (A) | - | - | - | 61 | 61 | 93 | 79 | 86 | - | 258 | ||||||||||||||||||||||||||||||
Segment Sales | 733 | 826 | 821 | 824 | 3,204 | 802 | 822 | 874 | - | 2,498 | ||||||||||||||||||||||||||||||
Unallocated and other (B) | 29 | 18 | 25 | 24 | 96 | 18 | 20 | 29 | - | 67 | ||||||||||||||||||||||||||||||
Net sales and other operating revenues | $ | 762 | $ | 844 | $ | 846 | $ | 848 | $ | 3,300 | $ | 820 | $ | 842 | $ | 903 | $ | - | $ | 2,565 | ||||||||||||||||||||
Segment Earnings Before Interest and Taxes | ||||||||||||||||||||||||||||||||||||||||
Reinforcement Materials | 55 | 72 | 59 | 41 | 227 | 50 | 41 | 48 | - | 139 | ||||||||||||||||||||||||||||||
Performance Materials | 21 | 35 | 38 | 34 | 128 | 26 | 37 | 35 | - | 98 | ||||||||||||||||||||||||||||||
Advanced Technologies | 5 | 16 | 12 | 16 | 49 | 7 | 8 | 27 | - | 42 | ||||||||||||||||||||||||||||||
Purification Solutions (A) | - | - | - | 5 | 5 | 7 | 3 | 1 | - | 11 | ||||||||||||||||||||||||||||||
Total Segment Earnings Before Interest and Taxes (C) | 81 | 123 | 109 | 96 | 409 | 90 | 89 | 111 | - | 290 | ||||||||||||||||||||||||||||||
Unallocated and Other | ||||||||||||||||||||||||||||||||||||||||
Interest expense | (10 | ) | (9 | ) | (11 | ) | (16 | ) | (46 | ) | (16 | ) | (16 | ) | (15 | ) | - | (47 | ) | |||||||||||||||||||||
Certain items (D) | (5 | ) | (9 | ) | (7 | ) | (30 | ) | (51 | ) | (20 | ) | (20 | ) | (4 | ) | - | (44 | ) | |||||||||||||||||||||
Unallocated corporate costs | (14 | ) | (18 | ) | (12 | ) | (12 | ) | (56 | ) | (13 | ) | (16 | ) | (13 | ) | - | (42 | ) | |||||||||||||||||||||
General unallocated income (expense) (E) | 4 | (8 | ) | 3 | 1 | - | 3 | 2 | (3 | ) | - | 2 | ||||||||||||||||||||||||||||
Less: Equity in earnings of affiliated companies | (1 | ) | (3 | ) | (4 | ) | (3 | ) | (11 | ) | (3 | ) | (3 | ) | (3 | ) | - | (9 | ) | |||||||||||||||||||||
Income from continuing operations before income taxes and equity in earnings of affiliated companies |
55 | 76 | 78 | 36 | 245 | 41 | 36 | 73 | - | 150 | ||||||||||||||||||||||||||||||
Provision for income taxes (including tax certain items) | (16 | ) | (23 | ) | (16 | ) | - | (55 | ) | (19 | ) | (16 | ) | (16 | ) | - | (51 | ) | ||||||||||||||||||||||
Equity in earnings of affiliated companies | 1 | 3 | 4 | 3 | 11 | 3 | 3 | 3 | - | 9 | ||||||||||||||||||||||||||||||
Income from continuing operations | 40 | 56 | 66 | 39 | 201 | 25 | 23 | 60 | - | 108 | ||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax (F) | 11 | 189 | 4 | 1 | 205 | (1 | ) | - | 2 | - | 1 | |||||||||||||||||||||||||||||
Net income | 51 | 245 | 70 | 40 | 406 | 24 | 23 | 62 | - | 109 | ||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 5 | 5 | 4 | 4 | 18 | 4 | (4 | ) | 3 | - | 3 | |||||||||||||||||||||||||||||
Net income attributable to Cabot Corporation | $ | 46 | $ | 240 | $ | 66 | $ | 36 | $ | 388 | $ | 20 | $ | 27 | $ | 59 | $ | - | $ | 106 | ||||||||||||||||||||
Diluted earnings per share of common stock attributable to Cabot Corporation |
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Continuing operations | $ | 0.55 | $ | 0.78 | $ | 0.96 | $ | 0.54 | $ | 2.83 | $ | 0.33 | $ | 0.42 | $ | 0.86 | $ | - | $ | 1.61 | ||||||||||||||||||||
Discontinued operations (F) | 0.16 | 2.92 | 0.06 | 0.02 | 3.16 | (0.02 | ) | - | 0.04 | - | 0.02 | |||||||||||||||||||||||||||||
Net income attributable to Cabot Corporation | $ | 0.71 | $ | 3.70 | $ | 1.02 | $ | 0.56 | $ | 5.99 | $ | 0.31 | $ | 0.42 | $ | 0.90 | $ | - | $ | 1.63 | ||||||||||||||||||||
Adjusted earnings per share | ||||||||||||||||||||||||||||||||||||||||
Adjusted EPS (G) | $ | 0.63 | $ | 0.96 | $ | 1.00 | $ | 0.73 | $ | 3.32 | $ | 0.66 | $ | 0.63 | $ | 0.84 | $ | - | $ | 2.13 | ||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||||
Diluted | 64.2 | 64.0 | 64.3 | 64.2 | 64.2 | 64.1 | 64.4 | 64.5 | - | 64.3 | ||||||||||||||||||||||||||||||
(A) |
Purification Solutions includes two months of results in fiscal 2012 due to the acquisition of Norit N.V. by Cabot Corporation on July 31, 2012. Segment EBIT amounts do not include an allocation of costs to the Purification Solutions segment for corporate administrative and functional support for any periods presented. As we continue the integration of this business and identify synergies and determine the functional costs to be appropriately allocated, we expect an allocation of these costs will be determined and made in the fourth quarter of fiscal 2013. These allocations are not expected to exceed $10 million for the full fiscal year 2013, and are currently reflected in Unallocated corporate costs and other segment results. |
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(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) | Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS and Operating Tax Rate table. | |||||||||||||||||||||||||||||||||||||||
(E) | 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. | |||||||||||||||||||||||||||||||||||||||
(F) | Amounts relate to the divesture of the Supermetals business. | |||||||||||||||||||||||||||||||||||||||
(G) | 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. | |||||||||||||||||||||||||||||||||||||||
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CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS AND OPERATING TAX RATE | |||||||||||||||||||||||||||||||||||||||||||||
TABLE 1: DETAIL OF CERTAIN ITEMS | |||||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | Three Months | Nine 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) | ||||||||||||||||||||||||||||||||||||||
Certain items before and after income taxes |
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Global restructuring activities | $ | (5 | ) | $ | (2 | ) | $ | (30 | ) | $ | (14 | ) | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.32 | ) | $ | (0.20 | ) | |||||||||||||||||||||
Acquisition related charges | (2 | ) | (5 | ) | (18 | ) | (5 | ) | (0.02 | ) | (0.09 | ) | (0.19 | ) | (0.09 | ) | |||||||||||||||||||||||||||||
Environmental and legal reserves | — | — | — | (2 | ) | — | — | — | (0.02 | ) | |||||||||||||||||||||||||||||||||||
Foreign currency gain on revaluations | 3 | — | 4 | — | 0.04 | — | 0.05 | — | |||||||||||||||||||||||||||||||||||||
Certain items before tax | (4 | ) | (7 | ) | (44 | ) | (21 | ) | (0.04 | ) | (0.11 | ) | (0.46 | ) | (0.31 | ) | |||||||||||||||||||||||||||||
Tax impact of certain items | — | — | 5 | 2 | |||||||||||||||||||||||||||||||||||||||||
Certain items after tax | (4 | ) | (7 | ) | (39 | ) | (19 | ) | (0.04 | ) | (0.11 | ) | (0.46 | ) | (0.31 | ) | |||||||||||||||||||||||||||||
Tax-related certain items | |||||||||||||||||||||||||||||||||||||||||||||
Tax impact of certain foreign exchange gains (losses) | — | 1 | (12 | ) | (2 | ) | — | 0.01 | (0.19 | ) | (0.04 | ) | |||||||||||||||||||||||||||||||||
Discrete tax items | 4 | 3 | 9 | 2 | 0.06 | 0.06 | 0.13 | 0.05 | |||||||||||||||||||||||||||||||||||||
Total tax-related certain items | 4 | 4 | (3 | ) | — | 0.06 | 0.07 | (0.06 | ) | 0.01 | |||||||||||||||||||||||||||||||||||
Total certain items after tax | — | (3 | ) | (42 | ) | (19 | ) | 0.02 | (0.04 | ) | (0.52 | ) | (0.30 | ) | |||||||||||||||||||||||||||||||
Discontinued operations after income taxes (B) |
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CSM business divestiture after tax | 2 | 4 | 1 | 204 | 0.04 | 0.06 | 0.02 | 3.14 | |||||||||||||||||||||||||||||||||||||
Total discontinued operations after tax | $ | 2 | $ | 4 | $ | 1 | $ | 204 | $ | 0.04 | $ | 0.06 | $ | 0.02 | $ | 3.14 | |||||||||||||||||||||||||||||
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE ITEM | |||||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | |||||||||||||||||||||||||||||||||||||||||||
Dollars in millions, Pre-Tax (unaudited) | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||
Statement of Operations Line Item (C) |
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Cost of sales | $ | (4 | ) | $ | (2 | ) | $ | (36 | ) | $ | (14 | ) | |||||||||||||||||||||||||||||||||
Selling and administrative expenses | (3 | ) | (5 | ) | (9 | ) | (7 | ) | |||||||||||||||||||||||||||||||||||||
Research and technical expenses | (1 | ) | — | (2 | ) | — | |||||||||||||||||||||||||||||||||||||||
Other | 4 | — | 3 | — | |||||||||||||||||||||||||||||||||||||||||
Total certain items | $ | (4 | ) | $ | (7 | ) | $ | (44 | ) | $ | (21 | ) | |||||||||||||||||||||||||||||||||
TABLE 3: RECONCILIATION OF TAX CERTAIN ITEMS | |||||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | |||||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||
Reconciliation of Provision for income taxes, excluding certain items, to Provision for income taxes |
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Provision for income taxes | $ | (16 | ) | $ | (16 | ) | $ | (51 | ) | $ | (55 | ) | |||||||||||||||||||||||||||||||||
Less: Tax impact of certain items | — | — | 5 | 2 | |||||||||||||||||||||||||||||||||||||||||
Less: Tax related certain items | 4 | 4 | (3 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Provision for income taxes, excluding certain items | $ | (20 | ) | $ | (20 | ) | $ | (53 | ) | $ | (57 | ) | |||||||||||||||||||||||||||||||||
TABLE 4: RECONCILIATION OF OPERATING TAX RATE | |||||||||||||||||||||||||||||||||||||||||||||
Periods ended June 30 | Three Months | Nine Months | |||||||||||||||||||||||||||||||||||||||||||
Dollars in millions (unaudited) | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||
Reconciliation of the effective tax rate to the operating tax rate |
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Provision for income taxes | $ | (16 | ) | $ | (16 | ) | $ | (51 | ) | $ | (55 | ) | |||||||||||||||||||||||||||||||||
Effective tax rate | 22 | % | 20 | % | 34 | % | 26 | % | |||||||||||||||||||||||||||||||||||||
Impact of discrete tax items: | |||||||||||||||||||||||||||||||||||||||||||||
Unusual or infrequent items |
4 |
% |
- | % | (5 | %) | - | % | |||||||||||||||||||||||||||||||||||||
Items related to uncertain tax positions |
- |
% |
2 | % | 1 | % | - | % | |||||||||||||||||||||||||||||||||||||
Other discrete tax items | 2 | % | 5 | % | 2 | % | 1 | % | |||||||||||||||||||||||||||||||||||||
Impact of certain items |
(1 |
%) |
(2 | %) | (5 | %) | (2 | %) | |||||||||||||||||||||||||||||||||||||
Operating tax rate | 27 | % | 25 | % | 27 | % | 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) | Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2012 YTD | Dec. Q | Mar. Q | Jun. Q | Sept. Q | FY 2013 YTD | |||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EPS to GAAP EPS |
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Net income per share attributable to Cabot Corporation | $ | 0.71 | $ | 3.70 | $ | 1.02 | $ | 0.56 | $ | 5.99 | $ | 0.31 | $ | 0.42 | $ | 0.90 | $ | 1.63 | |||||||||||||||||||||||||||
Less: Net income (loss) per share from discontinued operations(B) | 0.16 | 2.92 | 0.06 | 0.02 | 3.16 | (0.02 | ) | - | 0.04 | 0.02 | |||||||||||||||||||||||||||||||||||
Net income per share from continuing operations | $ | 0.55 | $ | 0.78 | $ | 0.96 | $ | 0.54 | $ | 2.83 | $ | 0.33 | $ | 0.42 | $ | 0.86 | $ | 1.61 | |||||||||||||||||||||||||||
Less: Certain items after tax | (0.08 | ) | (0.18 | ) | (0.04 | ) | (0.19 | ) | (0.49 | ) | (0.33 | ) | (0.21 | ) | 0.02 | (0.52 | ) | ||||||||||||||||||||||||||||
Adjusted earnings per share | $ | 0.63 | $ | 0.96 | $ | 1.00 | $ | 0.73 | $ | 3.32 | $ | 0.66 | $ | 0.63 | $ | 0.84 | $ | 2.13 | |||||||||||||||||||||||||||
(A) | Per share amounts are calculated after tax and, where applicable, noncontrolling interests, net of tax. | ||||||||||||||||||||||||||||||||||||||||||||
(B) | Amounts relate 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. | ||||||||||||||||||||||||||||||||||||||||||||
Source:
Investor Contact:
Cabot Corporation
Erica
McLaughlin, 617-342-6090