Cabot Launches Engineered Elastomer Composites Solutions

Cabot Corporation (NYSE:CBT) announced the launch of its Engineered Elastomer Composites (E2C) solutions and DX9730, its first E2C product.

Notably, E2C solutions are pre-mixed composite solutions geared to help tire manufacturers unlock superior performance sustainably and economically, allowed by proprietary technology for mixing reinforcing agents into elastomers.

E2C solutions allow tire producers to streamline the commercialization of high-performance products by making available pre-mixed composites supplied in a ready-to-use and easy-to-handle product shape.

Without additional capital investment, E2C solutions can be incorporated into existing production methods. Compared with conventional products, E2C solutions need fewer mixing phases, lower mixing temperatures and shorter mixing cycles, substantially enabling additional production capacity and lowering operating costs.

Per management, by partnering with existing customers, Cabot demonstrated the power to allow growth by shortening development cycles, extending the performance triangle, and minimizing operational barriers to new product commercialization.

E2C solutions demonstrated breaking critical trade-offs in off-the-road (OTR)/earthmover tire design by substantially increasing tire life and reducing operating temperature. Notably, E2C series of solutions provide balanced performance, increased durability and improved energy efficiency, and can be designed to provide maximum performance benefits for specific OTR/earthmover applications. Notably, DX9730 is part of the new Durability series geared to maximize operational uptime and minimize in-field failures.

Cabot’s E2C solutions are geared to raise the bar in tire performance, while offering tire production efficiencies. Notably, the company’s E2C DX9730 is designed for producers of OTR/earthmover tires that are seeking step-change innovation for robust and longer-lasting tires, resulting in larger sustainability gains.

Cabot’s shares have dipped 22.1% in the past year compared with the industry’s decline of 34.8%.

Early this month, the company reported profits of $41 million or 70 cents per share for the first quarter of fiscal 2019, down from $69 million or $1.14 per share in the year-ago quarter. Also, adjusted earnings per share of 69 cents missed the Zacks Consensus Estimate of 76 cents.

Net sales declined 11.4% year over year to $727 million in the fiscal first quarter. It also lagged the Zacks Consensus Estimate of $793.6 million.

On the first-quarter earnings call, the company said that it expects to benefit from the calendar year 2020 customer agreements for the Reinforcement Materials unit. Moreover, volumes are likely to return to a normalized level, starting second-quarter fiscal 2020.

For the near-term, the company anticipates the continuation of the challenging price environment for fumed silica in Europe and China in the Performance Chemicals unit that it witnessed in the fiscal first quarter.

For the Purification Solutions unit, the company continues to expect improvement in EBIT on a year-over-year basis.

For fiscal 2020, adjusted earnings are projected to be $3.60-$3.90 per share compared with $3.60-$4.10 mentioned earlier.

Cabot Corporation Price and Consensus

Zacks Rank & Stocks to Consider

Cabot currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. (NYSE:DQ) , NovaGold Resources Inc. (NYSE:NG) and Commercial Metals Company (NYSE:CMC) .

Daqo New Energy has a projected earnings growth rate of 353.7% for 2020. The company’s shares have rallied 73.2% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold has a projected earnings growth rate of 11.1% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have surged 121.4% in a year.

Commercial Metals currently has a Zacks Rank #2 and a projected earnings growth rate of 21.6% for 2020. The company’s shares have rallied 9.6% in a year.

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