Cabot Corp (CBT) Q2 Earnings And Revenues Beat Estimates

Cabot Corporation (NYSE:CBT) recorded net earnings (attributable to shareholders) of $74 million or $1.18 per share for the second quarter of fiscal 2017 (ended Mar 31, 2017) compared with $48 million or 76 cents recorded a year ago.

Barring one-time items, the adjusted earnings for the reported quarter were 87 cents per share, topping the Zacks Consensus Estimate of 85 cents.

Revenues increased around 19.4% year over year to $678 million in the reported quarter. Revenues in the quarter were largely driven by higher volumes across all segments. Sales beat the Zacks Consensus Estimate of $617 million.

Segment Highlights

Reinforcement Materials sales in the reported quarter rose 34.9% year over year to $352 million.

Sales from the Performance Chemicals rose 5.6% year over year to $228 million in the reported quarter.

Sales from the Purification Solutions remained flat at $67 million year over year in reported quarter.

Sales from the Specialty Fluids marginally increased to $7 million in the reported quarter compared with $6 million reported in the year-ago quarter.

Financial Position

Cabot Corp. ended the fiscal second quarter with cash balance of $133 million.

The company reported long-term debt of $664 million as of Mar 31, 2017.

Cash used in operating activities were around $51 million for the fiscal second quarter.

Outlook

The company said that it expects volumes of the Reinforcement Materials segment to be in line with the reported quarter, owing to higher level of planned maintenance activities. The demand for Performance Chemicals end market should remain robust, but higher feedstock costs will continue to create year-over-year impact. Cabot Corp. anticipates Purification Solutions to benefit from volume growth in the fiscal third quarter, which will be offset by costs associated with turnaround initiatives and inventory drawdown. The company is focused on delivering shareholder value by improving annual adjusted earnings by 7–10% over time and this year it expects to deliver adjusted earnings growth in the higher end of this range.

Price Performance

Cabot Corp.’s shares fell around 6.2% over the past three months, underperforming the Zacks categorized Chemicals-Diversified industry’s 5.2% gain.

Zacks Rank & Key Picks

Cabot Corp. currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the basic materials space include Kronos Worldwide Inc (NYSE:KRO) , Akzo Nobel NV (OTC:AKZOY) and ArcelorMittal (NYSE:MT) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Kronos has an expected long-term earnings growth of 5%.

Akzo Nobel has an expected long-term earnings growth of 11.1%.

ArcelorMittal has an expected long-term earnings growth of 11.5%.

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