[May 01, 2017] |
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Cabot Corp Reports Second Quarter Fiscal 2017 Results
Cabot
Corporation (NYSE: CBT) today announced results for its second
quarter of fiscal year 2017.
Key Highlights
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Diluted EPS up 55% over prior year; Adjusted EPS up 24%
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Stronger volumes across all segments drove significant improvement
in year-over-year operating results
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Reinforcement Materials EBIT up 59% year over year; strongest EBIT
quarter since 2014
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Returned cash to shareholders: $19 million in dividends and $15
million in share repurchases
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(In millions, except per share amounts)
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Second Quarter
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2017
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2016
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Net sales
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$
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678
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$
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568
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Net income (loss) attributable to Cabot Corporation
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$
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74
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$
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48
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Net income (loss) per diluted share attributable to
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$
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1.18
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$
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0.76
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Cabot Corporation
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Less: Certain items after tax per share
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$
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0.31
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$
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0.06
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Adjusted EPS
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$
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0.87
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$
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0.70
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Commenting on the results, Cabot President and CEO Sean Keohane, said,
"We continue to see strong operating results on a year-over-year basis,
driven largely by higher volumes across all segments. The Reinforcement
Materials segment delivered a 59% year-over-year increase in EBIT as we
saw improved margins and solid demand growth across all regions. Our
Performance Chemicals segment delivered results in line with
expectations as we saw robust volume growth in Specialty Carbons and
Formulations. Strong MATS volumes drove an improvement in Purification
Solutions EBIT and Specialty Fluids saw higher volumes in the quarter."
Keohane continued, "In addition, we returned $34 million of cash to
shareholders during the quarter."
Financial Detail For the second
quarter of fiscal 2017, net income attributable to Cabot Corporation was
$74 million ($1.18 per diluted common share). Net income includes a per
share benefit of $0.31 from certain items, principally reflecting a tax
benefit on the repatriation of previously taxed foreign earnings.
Adjusted EPS for the second quarter of fiscal 2017 was $0.87 per share.
Segment Results Reinforcement
Materials - Second quarter fiscal 2017 EBIT in Reinforcement
Materials increased by $20 million compared to the second quarter of
fiscal 2016. The increase in EBIT was principally driven by higher unit
margins and volumes from calendar year 2017 customer agreements and an
improved demand environment in China. Sequentially, Reinforcement
Materials EBIT increased by $14 million compared to the first quarter of
fiscal 2017 driven by higher volumes and improved margins. Sequentially,
volumes increased by 6% largely due to higher volumes from the 2017
calendar year customer agreements and strong demand in the tire industry.
Global and regional volume changes for Reinforcement Materials for the
second quarter of fiscal 2017 as compared to the same quarter of the
prior year and the first quarter of fiscal 2017 are included in the
table below:
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Second Quarter
Year over Year Change
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Second Quarter
Sequential Change
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Changes in Global Reinforcement Materials Volumes
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6%
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6%
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Asia
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3%
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(3%)
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Europe, Middle East, Africa
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2%
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18%
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Americas
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11%
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13%
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Performance Chemicals - Second quarter fiscal 2017 EBIT in
Performance Chemicals decreased by $7 million compared to the second
quarter of fiscal 2016 due to lower unit margins from the impact of
higher feedstock costs, lower volumes in CMP applications and higher
fixed costs. These impacts were partially offset by increased volumes of
15% in the Specialty Carbons and Formulations business and 2% in the
Metal Oxides business. Sequentially, Performance Chemicals EBIT
increased by $2 million compared to the first quarter of fiscal 2017,
primarily due to seasonally higher volumes, with a 19% increase in
Specialty Carbons and Formulations and a 2% increase in Metal Oxides.
The higher volumes were partially offset by lower unit margins and an
unfavorable impact from reducing inventory levels during the quarter.
Purification Solutions - Second quarter fiscal 2017 EBIT in
Purification Solutions increased by $4 million compared to the second
quarter of fiscal 2016 due to higher volumes associated with MATS
related demand and a favorable impact from an inventory build versus a
prior year draw, which was partially offset by lower unit margins.
Sequentially, Purification Solutions EBIT decreased by $2 million
compared to the first quarter of fiscal 2017 primarily due to lower
volumes from an unusually warm winter and higher fixed costs.
Specialty Fluids - Second quarter fiscal 2017 EBIT in Specialty
Fluids increased by $2 million compared to the second quarter of fiscal
2016 primarily due to higher volumes in Fine Cesium Chemicals.
Sequentially, Specialty Fluids EBIT decreased by $2 million compared to
the first quarter of fiscal 2017 primarily due to lower project activity.
Cash Performance - The Company ended the second quarter of
fiscal 2017 with a cash balance of $133 million. During the quarter,
cash flows from operating activities were a use of cash of $51 million,
which included a $134 million increase in net working capital largely
due to higher volumes, working capital days and feedstock costs. Capital
expenditures in the quarter were $23 million. Additional uses of cash
during the second quarter included $19 million for dividends and $15
million for share repurchases.
Taxes - During the second quarter of fiscal 2017, the Company
recorded a tax benefit of $1 million for an effective tax rate of (1%).
This included a benefit of $20 million from the tax-related certain
items described above. Excluding the impact of certain items on both
operating income and the tax provision, the operating tax rate on
continuing operations for the second quarter of fiscal 2017 was 24%.
Outlook Commenting on the
outlook for the company, Keohane said, "We are very pleased with our
second quarter results and remain focused on delivering a strong second
half of the fiscal year. We expect Reinforcement Materials volumes in
line with the second quarter while the business will experience a higher
level of planned maintenance activity. While demand in our Performance
Chemicals end markets remains robust, the segment will continue to see
some year-over-year impact from higher feedstock costs. We expect
Purification Solutions will benefit from volume growth in the third
quarter which will be offset by inventory drawdowns and costs associated
with turnaround activities. Overall, we remain focused on delivering
shareholder value by growing our annual adjusted EPS by 7-10% over time
and expect to be toward the high end of that range this year."
Earnings Call The Company will
host a conference call with industry analysts at 2:00 p.m. Eastern time
on Tuesday, May 2, 2017. The call can be accessed through Cabot's
investor relations website at http://investor.cabot-corp.com
About Cabot Corporation Cabot
Corporation (NYSE: CBT) is a global specialty chemicals and performance
materials company, headquartered in Boston, Massachusetts. The Company
is a leading provider of rubber
and specialty
carbons, activated
carbon, inkjet
colorants, cesium
formate drilling fluids, fumed
silica, and aerogel.
Cabot routinely posts information that may be important to investors in
the "Investors" section of its website at www.cabotcorp.com.
The company encourages investors and potential investors to consult the
Cabot website regularly.
Forward-Looking Statements -- This earnings release contains
forward-looking statements. All statements that address expectations or
projections about the future, including our expectations for volumes in
the remaining quarters of fiscal 2017 and the factors that we expect
will impact volumes, demand for our products, margins, and adjusted
earnings per share growth are forward-looking statements. 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 or implied by forward-looking
statements. Important factors that could cause our results to differ
materially from those expressed or implied in the forward-looking
statements include, but are not limited to volatility in the price of
energy and raw materials; competition from other specialty chemical
companies; safety, health and environmental requirements; a significant
adverse change in a customer relationship; negative or uncertain
worldwide or regional economic conditions; unanticipated delays in site
development projects; and fluctuations in foreign currency exchange and
interest rates . These factors are discussed more fully in the reports
we file with the Securities and Exchange Commission, particularly under
the heading "Risk Factors" in our annual report on Form 10-K for our
fiscal year ended September 30, 2016, filed with the SEC at www.sec.gov.
We assume no obligation to provide revisions to any forward-looking
statements should circumstances change, except as otherwise required by
securities and other applicable laws.
Use of Non-GAAP Financial Measures To supplement Cabot's
consolidated financial statements presented on a generally accepted
accounting principles ("GAAP") basis, the preceding discussion of our
results and the accompanying financial tables report Adjusted EPS and
our operating tax rate, both of which are non-GAAP financial measures.
These non-GAAP financial measures are not computed in accordance with,
or as an alternative to, GAAP. A reconciliation of Adjusted EPS to net
income (loss) per share attributable to Cabot Corporation, the most
directly comparable GAAP financial measure, and a reconciliation of
operating tax rate to effective tax rate, the most directly comparable
GAAP financial measure, are provided in the table titled "Certain Items
and Reconciliation of Adjusted EPS and Operating Tax Rate."
Management believes these non-GAAP measures provide investors with
greater transparency to the information used by Cabot management in its
financial and operational decision-making, allow investors to see
Cabot's results through the eyes of management, and better enable
Cabot's investors to understand Cabot's operating performance and
financial condition.
Adjusted EPS. In calculating Adjusted EPS, we exclude from our
net income (loss) per share from continuing operations items of expense
and income that management does not consider representative of the
Company's business operations. Accordingly, reporting earnings on an
adjusted basis supplements the GAAP measure of performance and provides
additional information related to the underlying performance of the
business. For example, certain of the items we exclude are items that we
are required by GAAP to recognize in one period that relate to
activities extending over several periods or relate to single events
that management considers to be unusual and infrequent, although not
necessarily non-recurring. We refer to these items as "certain items."
Management believes excluding these items facilitates operating
performance comparisons from period to period by eliminating differences
caused by the existence and timing of certain expense and income items
that would not otherwise be apparent on a GAAP basis and evaluates the
Company's operating performance without the impact of these costs or
benefits. Management also uses adjusted EPS as a key measure in
evaluating management performance for incentive compensation purposes.
The items of income and expense that we exclude from our calculations of
Adjusted EPS, as applicable, but that are included in our GAAP net
income (loss) per share, as applicable, are described below.
-
Global restructuring activities, which include costs or benefits
associated with cost reduction initiatives or plant closures and are
primarily related to (i) employee termination costs, (ii) asset
impairment charges associated with restructuring actions, (iii) costs
to close facilities, including environmental costs and contract
termination penalties, and (iv) gains realized on the sale of land or
equipment associated with restructured plants or locations.
-
Foreign currency loss on devaluation, which represents the impact of
controlled currency devaluations on the Company's net monetary assets
denominated in that currency. In fiscal 2016 this has applied to
currency exchange rate changes in Argentina and Venezuela.
-
Legal and environmental reserves and matters, which consist of costs
or benefits for matters typically related to former businesses or that
are otherwise incurred outside of the ordinary course of business.
-
Executive transition costs, which include incremental charges,
including stock compensation charges, associated with the retirement
or termination of employment of senior executives of the Company.
-
Asset impairment charges, which primarily include charges associated
with an impairment of goodwill or other long-lived assets.
-
Acquisition and integration-related charges, which include transaction
costs, redundant costs incurred during the period of integration, and
costs associated with transitioning certain management and business
processes to Cabot's processes.
-
Employee benefit plan settlement charges, which consist of the costs
associated with transferring the obligations and assets held by one of
the Company's defined benefit plans to a multi-employer plan.
Cabot does not provide a target GAAP EPS growth rate range or
reconciliation of the adjusted EPS growth rate range with a GAAP EPS
growth rate range because, without unreasonable effort, we are unable to
predict with reasonable certainty the matters we would allocate to
"certain items," including unusual gains and losses, costs associated
with future restructurings, acquisition-related expenses and litigation
outcomes. These items are uncertain, depend on various factors, and
could have a material impact on GAAP EPS in future periods.
Operating Tax Rate. Our "operating tax rate" 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 tax
rate adjustments and the impact of the items of expense and income we
identify as certain items on both our operating income and the tax
provision. Management believes that the operating tax rate is useful
supplemental information because it helps our investors compare our tax
rate year to year on a consistent basis and to understand what our tax
rate on current operations would be without the impact of these items.
Explanation of Terms Used
Product Mix. The term "product mix" refers to the mix of types
and grade of products sold or the mix of geographic regions where
products are sold, and the positive or negative impact this has on the
revenue or profitability of the business or segment.
Net Working Capital. The term "net working capital" includes
accounts receivable, inventory and accounts payable and accrued expenses.
Second Quarter Earnings Announcement, Fiscal 2017
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CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
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Periods ended March 31
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Three Months
|
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Six Months
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Dollars in millions, except per share amounts (unaudited)
|
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2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net sales and other operating revenues
|
|
$
|
678
|
|
|
$
|
568
|
|
|
$
|
1,289
|
|
|
$
|
1,171
|
|
Cost of sales
|
|
|
509
|
|
|
|
418
|
|
|
|
963
|
|
|
|
922
|
|
Gross profit
|
|
|
169
|
|
|
|
150
|
|
|
|
326
|
|
|
|
249
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses
|
|
|
65
|
|
|
|
62
|
|
|
|
128
|
|
|
|
133
|
|
Research and technical expenses
|
|
|
14
|
|
|
|
11
|
|
|
|
26
|
|
|
|
27
|
|
Income (loss) from operations
|
|
|
90
|
|
|
|
77
|
|
|
|
172
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
|
2
|
|
|
|
2
|
|
|
|
4
|
|
|
|
3
|
|
Interest expense
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(26
|
)
|
|
|
(27
|
)
|
Other income (expense)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
(11
|
)
|
Total other income (expense)
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|
|
(12
|
)
|
|
|
(15
|
)
|
|
|
(21
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)
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
and equity in earnings of affiliated companies
|
|
|
78
|
|
|
|
62
|
|
|
|
151
|
|
|
|
54
|
|
(Provision) benefit for income taxes
|
|
|
1
|
|
|
|
(11
|
)
|
|
|
(16
|
)
|
|
|
(6
|
)
|
Equity in earnings of affiliated companies, net of tax
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
Net income (loss)
|
|
|
80
|
|
|
|
52
|
|
|
|
138
|
|
|
|
49
|
|
Net income (loss) attributable to noncontrolling interests
|
|
|
6
|
|
|
|
4
|
|
|
|
10
|
|
|
|
8
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
74
|
|
|
$
|
48
|
|
|
$
|
128
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share of common stock attributable to
Cabot Corporation
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
1.18
|
|
|
$
|
0.76
|
|
|
$
|
2.03
|
|
|
$
|
0.65
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
62.8
|
|
|
|
62.8
|
|
|
|
62.8
|
|
|
|
62.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Earnings Announcement, Fiscal 2017
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|
|
|
|
|
|
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CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
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|
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|
|
|
|
|
|
|
|
|
|
Periods ended March 31
|
|
Three Months
|
|
Six Months
|
Dollars in millions, except per share amounts (unaudited)
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
Reinforcement Materials
|
|
$
|
352
|
|
|
$
|
261
|
|
|
$
|
647
|
|
|
$
|
549
|
|
Performance Chemicals
|
|
|
228
|
|
|
|
216
|
|
|
|
433
|
|
|
|
423
|
|
Specialty Carbons and Formulations
|
|
|
162
|
|
|
|
145
|
|
|
|
300
|
|
|
|
285
|
|
Metal Oxides
|
|
|
66
|
|
|
|
71
|
|
|
|
133
|
|
|
|
138
|
|
Purification Solutions
|
|
|
67
|
|
|
|
67
|
|
|
|
136
|
|
|
|
133
|
|
Specialty Fluids
|
|
|
7
|
|
|
|
6
|
|
|
|
18
|
|
|
|
13
|
|
Segment sales
|
|
|
654
|
|
|
|
550
|
|
|
|
1,234
|
|
|
|
1,118
|
|
Unallocated and other (A)
|
|
|
24
|
|
|
|
18
|
|
|
|
55
|
|
|
|
53
|
|
Net sales and other operating revenues
|
|
$
|
678
|
|
|
$
|
568
|
|
|
$
|
1,289
|
|
|
$
|
1,171
|
|
Segment Earnings Before Interest and Taxes (B)
|
|
|
|
|
|
|
|
|
Reinforcement Materials
|
|
$
|
54
|
|
|
$
|
34
|
|
|
$
|
94
|
|
|
$
|
60
|
|
Performance Chemicals
|
|
|
51
|
|
|
|
58
|
|
|
|
100
|
|
|
|
108
|
|
Purification Solutions
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
6
|
|
|
|
(7
|
)
|
Specialty Fluids
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
(2
|
)
|
Total Segment Earnings Before Interest and Taxes
|
|
|
107
|
|
|
|
88
|
|
|
|
202
|
|
|
|
159
|
|
|
|
|
|
|
|
|
|
|
Unallocated and Other
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(26
|
)
|
|
|
(27
|
)
|
Certain items (C)
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
(57
|
)
|
Unallocated corporate costs
|
|
|
(14
|
)
|
|
|
(12
|
)
|
|
|
(26
|
)
|
|
|
(25
|
)
|
General unallocated income (expense) (D)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
4
|
|
|
|
5
|
|
Less: Equity in earnings of affiliated companies
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
Income (loss) from continuing operations before income taxes
and equity in earnings of affiliated companies
|
|
|
78
|
|
|
|
62
|
|
|
|
151
|
|
|
|
54
|
|
(Provision) benefit for income taxes (including tax certain items)
|
|
|
1
|
|
|
|
(11
|
)
|
|
|
(16
|
)
|
|
|
(6
|
)
|
Equity in earnings of affiliated companies
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
Net income (loss)
|
|
|
80
|
|
|
|
52
|
|
|
|
138
|
|
|
|
49
|
|
Net income attributable to noncontrolling interests
|
|
|
6
|
|
|
|
4
|
|
|
|
10
|
|
|
|
8
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
74
|
|
|
$
|
48
|
|
|
$
|
128
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share of common stock attributable to
Cabot Corporation
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
1.18
|
|
|
$
|
0.76
|
|
|
$
|
2.03
|
|
|
$
|
0.65
|
|
Adjusted earnings per share
|
|
|
|
|
|
|
|
|
Adjusted EPS (E)
|
|
$
|
0.87
|
|
|
$
|
0.70
|
|
|
$
|
1.71
|
|
|
$
|
1.21
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
62.8
|
|
|
|
62.8
|
|
|
|
62.8
|
|
|
|
62.9
|
|
|
|
|
|
|
|
|
|
|
(A) Unallocated and other reflects royalties, other operating
revenues, external shipping and handling fees, the impact of the
corporate adjustment for unearned revenue, the removal of 100% of the
sales of an equity method affiliate, and discounting charges for certain
Notes receivable.
(B) 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.
(C) Details of certain items are presented in the Certain
Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(D) General unallocated income includes foreign currency
transaction gains (losses), interest income, dividend income, the profit
related to the corporate adjustment for unearned revenue, and the impact
of LIFO accounting.
(E) 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.
|
|
|
|
|
Second Quarter Earnings Announcement, Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
Dollars in millions
|
|
(unaudited)
|
|
(audited)
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
133
|
|
$
|
200
|
Accounts and notes receivable, net of reserve for doubtful accounts
of $10 and $8
|
|
|
520
|
|
|
456
|
Inventories:
|
|
|
|
|
Raw materials
|
|
|
88
|
|
|
66
|
Work in process
|
|
|
2
|
|
|
1
|
Finished goods
|
|
|
265
|
|
|
237
|
Other
|
|
|
40
|
|
|
38
|
Total inventories
|
|
|
395
|
|
|
342
|
Prepaid expenses and other current assets (A)
|
|
|
56
|
|
|
49
|
Total current assets
|
|
|
1,104
|
|
|
1,047
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,237
|
|
|
1,290
|
|
|
|
|
|
Goodwill
|
|
|
151
|
|
|
152
|
Equity affiliates
|
|
|
54
|
|
|
53
|
Intangible assets, net
|
|
|
134
|
|
|
140
|
Assets held for rent
|
|
|
101
|
|
|
97
|
Deferred income taxes (A)
|
|
|
254
|
|
|
216
|
Other Assets (A)
|
|
|
46
|
|
|
40
|
|
|
|
|
|
Total assets
|
|
$
|
3,081
|
|
$
|
3,035
|
|
|
|
|
|
(A) Effective October 1, 2016, the Company adopted a new
accounting standard simplifying the presentation of debt issuance costs
by presenting debt issuance costs as a reduction of the corresponding
debt liability. In addition, the Company early adopted a new accounting
standard that simplifies the presentation of deferred income taxes by
classifying all deferred taxes as noncurrent assets or liabilities.
These new standards were applied retrospectively. The retrospective
application of the standard that simplifies the presentation of debt
issuance costs resulted in the reclassification of $1 million and $3
million of unamortized debt issuance costs from "Prepaid expenses and
other current assets" and "Other assets", respectively, to "Long-term
debt" within the consolidated balance sheets as of September 30, 2016.
The retrospective application of the standard that simplifies the
presentation of deferred income taxes resulted in the reclassification
of $41 million of current deferred tax assets and $1 million of current
deferred tax liabilities to noncurrent Deferred income tax accounts
within the consolidated balance sheets as of September 30, 2016.
|
|
|
|
|
Second Quarter Earnings Announcement, Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
September 30,
|
|
|
|
2017
|
|
|
|
2016
|
|
Dollars in millions, except share and per share amounts
|
|
(unaudited)
|
|
(audited)
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
$
|
15
|
|
|
$
|
7
|
|
Accounts payable and accrued liabilities
|
|
|
377
|
|
|
|
364
|
|
Income taxes payable
|
|
|
32
|
|
|
|
25
|
|
Current portion of long-term debt
|
|
|
251
|
|
|
|
1
|
|
Total current liabilities
|
|
|
675
|
|
|
|
397
|
|
|
|
|
|
|
Long-term debt (A)
|
|
|
664
|
|
|
|
914
|
|
Deferred income taxes (A)
|
|
|
47
|
|
|
|
41
|
|
Other liabilities
|
|
|
270
|
|
|
|
285
|
|
Redeemable preferred stock
|
|
|
27
|
|
|
|
26
|
|
|
|
|
|
|
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: 62,675,606 and 62,449,425 shares
|
|
|
|
|
Outstanding: 62,470,543 and 62,210,711 shares
|
|
|
63
|
|
|
|
62
|
|
Less cost of 205,063 and 238,714 shares of common treasury stock
|
|
|
(7
|
)
|
|
|
(7
|
)
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
Retained earnings
|
|
|
1,638
|
|
|
|
1,544
|
|
Accumulated other comprehensive income
|
|
|
(389
|
)
|
|
|
(325
|
)
|
Total Cabot Corporation stockholders' equity
|
|
|
1,305
|
|
|
|
1,274
|
|
Noncontrolling interests
|
|
|
93
|
|
|
|
98
|
|
Total stockholders' equity
|
|
|
1,398
|
|
|
|
1,372
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,081
|
|
|
$
|
3,035
|
|
|
|
|
|
|
(A) Effective October 1, 2016, the Company adopted a new
accounting standard simplifying the presentation of debt issuance costs
by presenting debt issuance costs as a reduction of the corresponding
debt liability. In addition, the Company early adopted a new accounting
standard that simplifies the presentation of deferred income taxes by
classifying all deferred taxes as noncurrent assets or liabilities.
These new standards were applied retrospectively. The retrospective
application of the standard that simplifies the presentation of debt
issuance costs resulted in the reclassification of $1 million and $3
million of unamortized debt issuance costs from "Prepaid expenses and
other current assets" and "Other assets", respectively, to "Long-term
debt" within the consolidated balance sheets as of September 30, 2016.
The retrospective application of the standard that simplifies the
presentation of deferred income taxes resulted in the reclassification
of $41 million of current deferred tax assets and $1 million of current
deferred tax liabilities to noncurrent Deferred income tax accounts
within the consolidated balance sheets as of September 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2016
|
|
Fiscal 2017
|
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
|
|
$
|
288
|
|
|
$
|
261
|
|
|
$
|
270
|
|
|
$
|
289
|
|
|
$
|
1,108
|
|
|
$
|
295
|
|
|
$
|
352
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
647
|
|
Performance Chemicals
|
|
|
207
|
|
|
|
216
|
|
|
|
228
|
|
|
|
214
|
|
|
|
865
|
|
|
|
205
|
|
|
|
228
|
|
|
|
-
|
|
|
-
|
|
|
433
|
|
Specialty Carbons and Formulations
|
|
|
140
|
|
|
|
145
|
|
|
|
152
|
|
|
|
141
|
|
|
|
578
|
|
|
|
138
|
|
|
|
162
|
|
|
|
-
|
|
|
-
|
|
|
300
|
|
Metal Oxides
|
|
|
67
|
|
|
|
71
|
|
|
|
76
|
|
|
|
73
|
|
|
|
287
|
|
|
|
67
|
|
|
|
66
|
|
|
|
-
|
|
|
-
|
|
|
133
|
|
Purification Solutions
|
|
|
66
|
|
|
|
67
|
|
|
|
77
|
|
|
|
80
|
|
|
|
290
|
|
|
|
69
|
|
|
|
67
|
|
|
|
-
|
|
|
-
|
|
|
136
|
|
Specialty Fluids
|
|
|
7
|
|
|
|
6
|
|
|
|
19
|
|
|
|
15
|
|
|
|
47
|
|
|
|
11
|
|
|
|
7
|
|
|
|
-
|
|
|
-
|
|
|
18
|
|
Segment Sales
|
|
|
568
|
|
|
|
550
|
|
|
|
594
|
|
|
|
598
|
|
|
|
2,310
|
|
|
|
580
|
|
|
|
654
|
|
|
|
-
|
|
|
-
|
|
|
1,234
|
|
Unallocated and other (A)
|
|
|
35
|
|
|
|
18
|
|
|
|
27
|
|
|
|
21
|
|
|
|
101
|
|
|
|
31
|
|
|
|
24
|
|
|
|
-
|
|
|
-
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and other operating revenues
|
|
$
|
603
|
|
|
$
|
568
|
|
|
$
|
621
|
|
|
$
|
619
|
|
|
$
|
2,411
|
|
|
$
|
611
|
|
|
$
|
678
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Earnings Before Interest and Taxes (B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinforcement Materials
|
|
$
|
26
|
|
|
$
|
34
|
|
|
$
|
35
|
|
|
$
|
42
|
|
|
$
|
137
|
|
|
$
|
40
|
|
|
$
|
54
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
94
|
|
Performance Chemicals
|
|
|
50
|
|
|
|
58
|
|
|
|
59
|
|
|
|
58
|
|
|
|
225
|
|
|
|
49
|
|
|
|
51
|
|
|
|
-
|
|
|
-
|
|
|
100
|
|
Purification Solutions
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
2
|
|
|
|
(5
|
)
|
|
|
4
|
|
|
|
2
|
|
|
|
-
|
|
|
-
|
|
|
6
|
|
Specialty Fluids
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
10
|
|
|
|
5
|
|
|
|
13
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
2
|
|
Total Segment Earnings Before Interest and Taxes
|
|
|
71
|
|
|
|
88
|
|
|
|
104
|
|
|
|
107
|
|
|
|
370
|
|
|
|
95
|
|
|
|
107
|
|
|
|
-
|
|
|
-
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(54
|
)
|
|
|
(13
|
)
|
|
|
(13
|
)
|
|
|
-
|
|
|
-
|
|
|
(26
|
)
|
Certain items (C)
|
|
|
(58
|
)
|
|
|
1
|
|
|
|
(6
|
)
|
|
|
(18
|
)
|
|
|
(81
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Unallocated corporate costs
|
|
|
(13
|
)
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
|
(9
|
)
|
|
|
(45
|
)
|
|
|
(12
|
)
|
|
|
(14
|
)
|
|
|
-
|
|
|
-
|
|
|
(26
|
)
|
General unallocated income (expense) (D)
|
|
|
5
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
7
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
-
|
|
|
4
|
|
Less: Equity in earnings of affiliated companies
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
-
|
|
|
(3
|
)
|
Income (loss) from continuing operations before income taxes and
equity in earnings of affiliated companies
|
|
|
(8
|
)
|
|
|
62
|
|
|
|
74
|
|
|
|
66
|
|
|
|
194
|
|
|
|
73
|
|
|
|
78
|
|
|
|
-
|
|
|
-
|
|
|
151
|
|
(Provision) benefit for income taxes (including tax certain items)
|
|
|
5
|
|
|
|
(11
|
)
|
|
|
(15
|
)
|
|
|
(13
|
)
|
|
|
(34
|
)
|
|
|
(17
|
)
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
(16
|
)
|
Equity in earnings of affiliated companies
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
3
|
|
Income (loss) from continuing operations
|
|
|
(3
|
)
|
|
|
52
|
|
|
|
60
|
|
|
|
54
|
|
|
|
163
|
|
|
|
58
|
|
|
|
80
|
|
|
|
-
|
|
|
-
|
|
|
138
|
|
Income (loss) from discontinued operations, net of tax (E)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net income (loss)
|
|
|
(3
|
)
|
|
|
52
|
|
|
|
60
|
|
|
|
55
|
|
|
|
164
|
|
|
|
58
|
|
|
|
80
|
|
|
|
-
|
|
|
-
|
|
|
138
|
|
Net income (loss) attributable to noncontrolling interests
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
|
3
|
|
|
|
15
|
|
|
|
4
|
|
|
|
6
|
|
|
|
-
|
|
|
-
|
|
|
10
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
(7
|
)
|
|
$
|
48
|
|
|
$
|
56
|
|
|
$
|
52
|
|
|
$
|
149
|
|
|
$
|
54
|
|
|
$
|
74
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share of common stock attributable to
Cabot Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.11
|
)
|
|
$
|
0.76
|
|
|
$
|
0.88
|
|
|
$
|
0.81
|
|
|
$
|
2.34
|
|
|
$
|
0.85
|
|
|
$
|
1.18
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2.03
|
|
Discontinued operations (E)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net income (loss) attributable to Cabot Corporation (F)
|
|
$
|
(0.11
|
)
|
|
$
|
0.76
|
|
|
$
|
0.88
|
|
|
$
|
0.83
|
|
|
$
|
2.36
|
|
|
$
|
0.85
|
|
|
$
|
1.18
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS (G)
|
|
$
|
0.51
|
|
|
$
|
0.70
|
|
|
$
|
0.93
|
|
|
$
|
1.00
|
|
|
$
|
3.14
|
|
|
$
|
0.84
|
|
|
$
|
0.87
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1.71
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (F)
|
|
|
62.5
|
|
|
|
62.8
|
|
|
|
62.9
|
|
|
|
62.9
|
|
|
|
62.9
|
|
|
|
62.8
|
|
|
|
62.8
|
|
|
|
-
|
|
|
-
|
|
|
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Unallocated and other reflects royalties, other operating
revenues, external shipping and handling fees, the impact of the
corporate adjustment for unearned revenue, the removal of 100% of the
sales of an equity method affiliate and discounting charges for certain
Notes receivable.
(B) 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.
(C) Details of certain items are presented in the Certain
Items and Reconciliation of Adjusted EPS and Operating Tax Rate table.
(D) General unallocated income (expense) includes foreign
currency transaction gains (losses), interest income, dividend income,
the profit related to the corporate adjustment for unearned revenue, and
the impact of LIFO accounting.
(E) Amounts relate primarily to the previously divested
Supermetals and Security Materials businesses.
(F) The weighted average common shares outstanding used to
calculate earnings per share for the three months ended December 31,
2015 excludes approximately 1 million shares as those shares would be
antidilutive due to the Company's net loss position in that period.
(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.
|
|
|
|
|
|
|
|
|
Second Quarter Earnings Announcement, Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended March 31
|
|
Three Months
|
|
Six Months
|
Dollars in millions
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
80
|
|
|
$
|
52
|
|
|
$
|
138
|
|
|
$
|
49
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
38
|
|
|
|
41
|
|
|
|
76
|
|
|
|
82
|
|
Other non-cash (income) charges, net
|
|
|
(27
|
)
|
|
|
(7
|
)
|
|
|
(31
|
)
|
|
|
27
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Changes in certain working capital items (A)
|
|
|
(134
|
)
|
|
|
28
|
|
|
|
(118
|
)
|
|
|
68
|
|
Changes in other assets and liabilities, net
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(20
|
)
|
|
|
(43
|
)
|
Cash dividends received from equity affiliates
|
|
|
3
|
|
|
|
2
|
|
|
|
6
|
|
|
|
5
|
|
Cash provided by (used in) operating activities
|
|
|
(51
|
)
|
|
|
105
|
|
|
|
51
|
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(23
|
)
|
|
|
(28
|
)
|
|
|
(45
|
)
|
|
|
(52
|
)
|
Other investing activities, net
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(2
|
)
|
|
|
11
|
|
Cash used in investing activities
|
|
|
(24
|
)
|
|
|
(23
|
)
|
|
|
(47
|
)
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Change in debt, net
|
|
|
7
|
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
(15
|
)
|
Cash dividends paid to common stockholders
|
|
|
(19
|
)
|
|
|
(14
|
)
|
|
|
(38
|
)
|
|
|
(28
|
)
|
Other financing activities, net
|
|
|
4
|
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(18
|
)
|
Cash used in financing activities
|
|
|
(8
|
)
|
|
|
(20
|
)
|
|
|
(35
|
)
|
|
|
(61
|
)
|
Effect of exchange rates on cash
|
|
|
27
|
|
|
|
32
|
|
|
|
(36
|
)
|
|
|
15
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(56
|
)
|
|
|
94
|
|
|
|
(67
|
)
|
|
|
101
|
|
Cash and cash equivalents at beginning of period
|
|
|
189
|
|
|
|
84
|
|
|
|
200
|
|
|
|
77
|
|
Cash and cash equivalents at end of period
|
|
$
|
133
|
|
|
$
|
178
|
|
|
$
|
133
|
|
|
$
|
178
|
|
|
|
|
|
|
|
|
|
|
(A) Includes Accounts and notes receivable, Inventories, and
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Earnings Announcement, Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED
EPS AND OPERATING TAX RATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 1: DETAIL OF CERTAIN ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended March 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in millions, except per share amounts (unaudited)
|
|
Three Months
|
|
Six Months
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain items before and after income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global restructuring activities
|
|
|
(2
|
)
|
|
|
5
|
|
|
|
(2
|
)
|
|
|
(43
|
)
|
|
|
|
|
Foreign currency loss on devaluation
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
|
|
Legal and environmental matters and reserves
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
(3
|
)
|
|
|
|
|
Total certain items, pre-tax
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax impact of certain items (A)
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
19
|
|
|
|
|
|
Certain items after tax (excluding discrete tax items)
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain items after tax per share impact (excluding discrete tax
items)
|
|
$
|
-
|
|
|
$
|
0.07
|
|
|
$
|
0.01
|
|
|
$
|
(0.60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-related certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete tax items
|
|
|
20
|
|
|
|
-
|
|
|
|
20
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax-related certain items
|
|
|
20
|
|
|
|
-
|
|
|
|
20
|
|
|
|
3
|
|
|
|
|
|
Total tax-related certain items per share impact
|
|
$
|
0.31
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.31
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total certain items after tax
|
|
$
|
20
|
|
|
$
|
5
|
|
|
$
|
20
|
|
|
$
|
(35
|
)
|
|
|
|
|
Total certain items after tax per share impact
|
|
$
|
0.31
|
|
|
$
|
0.06
|
|
|
$
|
0.32
|
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 2: CERTAIN ITEMS STATEMENT OF OPERATIONS LINE ITEM
|
Periods ended March 31
|
|
Three Months
|
|
Six Months
|
|
|
|
|
Dollars in millions, Pre-Tax (unaudited)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Line Item (B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
(34
|
)
|
|
|
|
|
Selling and administrative expenses
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(7
|
)
|
|
|
|
|
Research and technical expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
|
|
Other expense
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
|
|
Total certain items, pre-tax
|
|
$
|
?
|
|
|
$
|
1
|
|
|
$
|
?
|
|
|
$
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 3: RECONCILIATION OF TAX CERTAIN ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended March 31
|
|
Three Months
|
|
Six Months
|
|
|
|
|
Dollars in millions (unaudited)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Provision for income taxes, excluding certain
items, to Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision) benefit for income taxes
|
|
$
|
1
|
|
|
$
|
(11
|
)
|
|
$
|
(16
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
Less: Tax impact of certain items
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
19
|
|
|
|
|
|
Less: Tax-related certain items
|
|
|
20
|
|
|
|
-
|
|
|
|
20
|
|
|
|
3
|
|
|
|
|
|
(Provision) benefit for income taxes, excluding certain items
|
|
$
|
(19
|
)
|
|
$
|
(15
|
)
|
|
$
|
(36
|
)
|
|
$
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 4: RECONCILIATION OF OPERATING TAX RATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended March 31
|
|
Three Months
|
|
Six Months
|
|
Forecast
|
Dollars in millions (unaudited)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the effective tax rate to the operating tax rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision) benefit for income taxes
|
|
$
|
1
|
|
|
$
|
(11
|
)
|
|
$
|
(16
|
)
|
|
$
|
(6
|
)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
(1
|
%)
|
|
|
20
|
%
|
|
|
11
|
%
|
|
|
12
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discrete tax items: (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unusual or infrequent items
|
|
|
25
|
%
|
|
|
(1
|
%)
|
|
|
12
|
%
|
|
|
1
|
%
|
|
|
6
|
%
|
Items related to uncertain tax positions
|
|
|
(1
|
%)
|
|
|
-
|
%
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
1
|
%
|
Other discrete tax items
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
-
|
%
|
|
|
1
|
%
|
|
|
-
|
%
|
Impact of certain items
|
|
|
-
|
%
|
|
|
5
|
%
|
|
|
-
|
%
|
|
|
8
|
%
|
|
|
-
|
%
|
Operating tax rate
|
|
|
24
|
%
|
|
|
25
|
%
|
|
|
24
|
%
|
|
|
25
|
%
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 5: RECONCILIATION OF ADJUSTED EPS BY QUARTER FOR FISCAL
2017 and FISCAL 2016
|
NON-GAAP MEASURE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended (unaudited)
|
|
Fiscal 2017(D)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017 YTD
|
Reconciliation of Adjusted EPS to GAAP EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to Cabot Corporation
|
|
$
|
0.85
|
|
|
$
|
1.18
|
|
|
$
|
?
|
|
|
$
|
?
|
|
|
$
|
2.03
|
|
Less: Certain items after tax per share
|
|
|
0.01
|
|
|
|
0.31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.32
|
|
Adjusted earnings per share
|
|
$
|
0.84
|
|
|
$
|
0.87
|
|
|
$
|
?
|
|
|
$
|
?
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periods ended (unaudited)
|
|
Fiscal 2016(D)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2016 YTD
|
Reconciliation of Adjusted EPS to GAAP EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to Cabot Corporation
|
|
$
|
(0.11
|
)
|
|
$
|
0.76
|
|
|
$
|
0.88
|
|
|
$
|
0.83
|
|
|
$
|
2.36
|
|
Less: Net income (loss) per share from discontinued operations(E)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
0.02
|
|
Net income (loss) per share from continuing operations
|
|
$
|
(0.11
|
)
|
|
$
|
0.76
|
|
|
$
|
0.88
|
|
|
$
|
0.81
|
|
|
$
|
2.34
|
|
Less: Certain items after tax per share
|
|
|
(0.62
|
)
|
|
|
0.06
|
|
|
|
(0.05
|
)
|
|
|
(0.19
|
)
|
|
|
(0.80
|
)
|
Adjusted earnings per share
|
|
$
|
0.51
|
|
|
$
|
0.70
|
|
|
$
|
0.93
|
|
|
$
|
1.00
|
|
|
$
|
3.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) The tax effect of certain items is determined by (1)
starting with the current and deferred income tax expense or benefit,
included in Net income attributable to Cabot Corporation, and (2)
subtracting the tax expense or benefit on "adjusted earnings". Adjusted
earnings is defined as the pre-tax income attributable to Cabot
Corporation excluding certain items. The tax expense or benefit on
adjusted earnings is calculated by applying the operating tax rate,
which includes both current and deferred taxes, as defined under the
section Use of Non-GAAP Financial Measures of the earnings release.
(B) This table indicates the line items where certain items
are recorded in the table titled Cabot Corporation Consolidated
Statements of Operations.
(C) The nature of the discrete tax items for the periods
ended March 31, 2017 and 2016 were as follows: (i) Unusual or infrequent
items during the three and six months ended March 31, 2017 included a
tax benefit associated with the generation of excess foreign tax credits
upon repatriation of previously taxed foreign earnings partially offset
by charges for the accrual of U.S. tax on certain foreign earnings of
prior years and the tax impact of nontaxable foreign exchange losses in
certain jurisdictions. Unusual or infrequent items during the three and
six months ended March 31, 2016 included tax benefits from the renewal
of the U.S. Research and Experimentation credit and extraordinary
dividends from subsidiaries, partially offset by a charge for the tax
impact of excludible foreign exchange gains and losses in certain
jurisdictions, (ii) Items related to uncertain tax positions included
tax benefits during the three and six months ended March 31, 2017 and
2016 from the reversal of accruals for uncertain tax positions due to
the expiration of statutes of limitations and the settlement of tax
audits (fiscal 2016 only), partially offset by charges for the accrual
of interest on uncertain tax positions and accrual of a prior year
uncertain tax position (fiscal 2017 only), and, (iii) Other discrete tax
items included tax benefits during the three and six months ended March
31, 2017 for various return to provision true ups related to tax return
filings. Other discrete tax items during the three and six months ended
March 31, 2016 included tax charges for a change in valuation allowance
on beginning of year tax balances, partially offset by tax benefits for
changes in tax laws.
(D) Per share amounts are calculated after tax and, where
applicable, noncontrolling interest, net of tax.
(E) Amounts relate primarily to the previously divested
Supermetals and Security Materials businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CABOT CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
All dollar amounts shown below are in millions, except per share
information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017 (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Reconciliation of Adjusted EPS to GAAP EPS
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to Cabot Corporation
|
|
$
|
0.85
|
|
|
$
|
1.18
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2.03
|
|
Less: Certain items after tax
|
|
|
0.01
|
|
|
|
0.31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.32
|
|
Adjusted earnings per share
|
|
$
|
0.84
|
|
|
$
|
0.87
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Per share amounts are calculated after tax and,
where applicable, noncontrolling interest, net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Reconciliation of Segment EBIT to Net
Income and Segment EBITDA Margin
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Cabot Corporation
|
|
$
|
54
|
|
|
$
|
74
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
128
|
|
Net income (loss) attributable to noncontrolling interests
|
|
|
4
|
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
|
Equity in earnings of affiliated companies, net of tax
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
Provision (benefit) for income taxes
|
|
|
17
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
16
|
|
Income (loss) from continuing operations before income taxes and
equity in earnings of affiliated companies
|
|
$
|
73
|
|
|
$
|
78
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
151
|
|
Interest expense
|
|
|
13
|
|
|
|
13
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26
|
|
Certain items
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Unallocated corporate costs
|
|
|
12
|
|
|
|
14
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26
|
|
General unallocated (income) expense
|
|
|
(5
|
)
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
Equity in earnings of affiliated companies
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
Total Segment EBIT
|
|
$
|
95
|
|
|
$
|
107
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
202
|
|
Plus: Total Depreciation & Amortization
|
|
|
38
|
|
|
|
38
|
|
|
|
-
|
|
|
|
-
|
|
|
|
76
|
|
Plus: Adjustments to Depreciation(B)
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
Total Segment EBITDA
|
|
$
|
133
|
|
|
$
|
146
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
279
|
|
Less: Unallocated Corporate Costs
|
|
|
(12
|
)
|
|
|
(14
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(26
|
)
|
Adjusted EBITDA
|
|
$
|
121
|
|
|
$
|
132
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Reinforcement Materials EBIT
|
|
$
|
40
|
|
|
$
|
54
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
94
|
|
Plus: Depreciation & Amortization
|
|
|
17
|
|
|
|
17
|
|
|
|
-
|
|
|
|
-
|
|
|
|
34
|
|
Reinforcement Materials EBITDA
|
|
$
|
57
|
|
|
$
|
71
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
128
|
|
Reinforcement Materials Sales
|
|
$
|
295
|
|
|
$
|
352
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
647
|
|
Reinforcement Materials EBITDA Margin
|
|
|
19
|
%
|
|
|
20
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Performance Chemicals EBIT
|
|
$
|
49
|
|
|
$
|
51
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
100
|
|
Plus: Depreciation & Amortization
|
|
|
11
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23
|
|
Performance Chemicals EBITDA
|
|
$
|
60
|
|
|
$
|
63
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
123
|
|
Performance Chemicals Sales
|
|
$
|
205
|
|
|
$
|
228
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
433
|
|
Performance Chemicals EBITDA Margin
|
|
|
29
|
%
|
|
|
28
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Purification Solutions EBIT
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6
|
|
Plus: Depreciation & Amortization
|
|
|
9
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19
|
|
Purification Solutions EBITDA
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25
|
|
Purification Solutions Sales
|
|
$
|
69
|
|
|
$
|
67
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
136
|
|
Purification Solutions EBITDA Margin
|
|
|
19
|
%
|
|
|
18
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
Specialty Fluids EBIT
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2
|
|
Plus: Depreciation & Amortization
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
Specialty Fluids EBITDA
|
|
$
|
3
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3
|
|
Specialty Fluids Sales
|
|
$
|
11
|
|
|
$
|
7
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
18
|
|
Specialty Fluids EBITDA Margin
|
|
|
27
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Discretionary Free Cash
Flow
|
|
Dec. Q
|
|
Mar. Q
|
|
Jun. Q
|
|
Sept. Q
|
|
FY 2017
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities (C)
|
|
|
102
|
|
|
|
(51
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
51
|
|
Less: Changes in net working capital (D)
|
|
|
16
|
|
|
|
(134
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(118
|
)
|
Less: Sustaining and compliance capital expenditures
|
|
|
21
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39
|
|
Discretionary Free Cash Flow
|
|
$
|
65
|
|
|
$
|
65
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
130
|
|
(B) Adjustments to depreciation includes the addition
of the depreciation expense of a contractual joint venture in
Purification Solutions less accelerated depreciation expense not
allocated to a business.
|
(C) As provided in the Consolidated Statement of Cash
Flows.
|
(D) Defined as changes in accounts receivable,
inventory and accounts payable and accrued liabilities as
presented on the Consolidated Statement of Cash Flows.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170501006329/en/
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