Cabot's Earnings Top Estimates in Q3, Sales Miss on Lower Volumes

Cabot Corporation CBT recorded third-quarter fiscal 2025 (ended June 30, 2025) earnings of $1.86 per share, down from the year-ago quarter's $1.94.

CBT posted adjusted earnings of $1.90 per share, down from the year-ago quarter's figure of $1.92. Adjusted earnings beat the Zacks Consensus Estimate of $1.80.

The company’s net sales in the quarter were $923 million, which missed the Zacks Consensus Estimate of $962.3 million. Net sales fell around 9.2% from the prior-year quarter.

CBT’s Segment Highlights

Reinforcement Materials’ sales decreased around 11.7% year over year to $573 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $128 million, down around 5.8% from the year-ago quarter. The decline in EBIT was primarily due to lower volumes in the Asia Pacific and the Americas.

In the reported quarter, sales in the Performance Chemicals division declined 3.6% year over year to $320 million. EBIT witnessed an increase of approximately 3.6% to $57 million. The increase in EBIT was primarily the result of higher gross profit per ton, which is partly offset by reduced volumes.

CBT’s Financials

The company concluded the third quarter of fiscal 2025 with a cash balance of $239 million. During the quarter, cash flows from operating activities generated $249 million. Capital expenditures for the fiscal third quarter totaled $61 million. During the third quarter, cash was also used to pay dividends of $24 million and to repurchase $40 million of shares.

CBT’s Outlook

The company reaffirmed its fiscal 2025 adjusted EPS guidance of $7.15 to $7.50, noting that ongoing uncertainty around tariffs and the global economy is dampening customer demand, leading to lower volumes in the second half of the year for both the Reinforcement Materials and Performance Chemicals segments. Based on current demand, results are expected to be in the mid-to-lower end of the range, though potentially improved demand in the fourth quarter from recent tariff developments could push results toward the higher end. Despite macroeconomic headwinds, the company still anticipates earnings growth and strong operating cash flow for the year. The company remains focused on cost reductions, operational optimization and disciplined execution, supported by a solid balance sheet that enables investment in growth initiatives and shareholder returns.

CBT’s Price Performance

Shares of Cabot have lost 18.1% in the past year compared with a 24.4% decline of the industry.

CBT’s Zacks Rank & Key Picks

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

Better-ranked stocks worth a look in the basic materials space include Gold Fields Limited GFI, Avino Silver & Gold Mines Ltd. ASM and Barrick Mining Corporation B.

Gold Fields is slated to report second-quarter results on Aug. 22. The Zacks Consensus Estimate for earnings is pegged at 59 cents. GFI carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avino Silver is scheduled to report second-quarter results on Aug. 13. The Zacks Consensus Estimate for ASM’s second-quarter earnings is pegged at 3 cents. ASM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 104.2%. ASM currently carries a Zacks Rank #1.

Barrick Mining is slated to report second-quarter results on Aug. 11. The consensus estimate for Barrick’s earnings is pegged at 47 cents. Barrick, carrying a Zacks Rank #1, beat the consensus estimate in three of the last four quarters, with the average earnings surprise being 12.5%.

 

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This article originally published on Zacks Investment Research (zacks.com).

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