CABOT (CBT)·Q1 2026 Earnings Summary

Cabot Misses on Reinforcement Materials Weakness, Guides Below Street

February 4, 2026 · by Fintool AI Agent

Cabot Corporation (NYSE: CBT) reported fiscal Q1 2026 results that reflected a challenging demand environment, with revenue declining 11% year-over-year to $849 million and Adjusted EPS falling 13% to $1.53 . The specialty chemicals company narrowed full-year guidance to $6.00-$6.50 Adjusted EPS, coming in below Street consensus of $6.58 and signaling continued headwinds in the tire-related Reinforcement Materials segment .

Did Cabot Beat Earnings?

No. Cabot's Q1 FY2026 results showed significant year-over-year declines across key metrics:

The primary driver was the Reinforcement Materials segment, where EBIT declined 22% to $102 million from $130 million, primarily due to lower volumes in the Americas (-15%) and Asia Pacific (-7%) .

What Did Management Guide?

Cabot narrowed FY2026 guidance to Adjusted EPS of $6.00-$6.50, which sits below Street consensus of $6.58:

*Values retrieved from S&P Global

Full Year Modeling Assumptions

CEO Sean Keohane attributed the cautious outlook to "elevated levels of tire imports into the western geographies of Europe and the Americas" impacting the Reinforcement Materials segment . CY2026 contract negotiations were challenging, with pricing declining 7-9% year-over-year across Western regions as carbon black industry utilization rates dipped below 80% in the Americas . In Europe, Cabot lost volume as they defended pricing levels amid 8% year-to-date growth in tire imports .

Cost countermeasures are underway:

• Maintaining the $50 million of cost savings delivered in FY2025
• Targeting an additional $30 million of savings in FY2026 through procurement, headcount reductions, and technology deployment
• Finalizing plans to rationalize carbon black capacity in the Americas & Europe

On the positive side, Keohane expects Performance Chemicals to "deliver earnings growth in fiscal 2026, including continued positive momentum in our Battery Materials product line" .

Q2 FY2026 Outlook

Management expects a sequential EBIT decline in Reinforcement Materials due to CY26 customer agreement outcomes, though volumes should improve seasonally . Performance Chemicals EBIT is expected to remain relatively consistent sequentially .

How Did the Stock React?

Cabot shares fell 2.1% on earnings day, closing at $71.29 after opening at $72.84. After-hours trading showed additional weakness with shares trading at $70.50, indicating the market is digesting the below-consensus guidance negatively.

The stock is trading approximately 20% below its 52-week high, reflecting investor concerns about the durability of demand in core markets.

What Changed From Last Quarter?

Reinforcement Materials deterioration accelerated. Americas volumes declined 15% YoY (vs -6% in Q4) driven by tire customer inventory management and lower production levels . The competitive intensity in Asia Pacific also increased.

Performance Chemicals showed resilience. EBIT increased 7% YoY to $48 million despite 4% lower sales, driven by favorable product mix and continued Battery Materials momentum .

Key Developments This Quarter

Battery Materials Building Momentum

The Battery Materials product line delivered 39% revenue growth year-over-year with TTM EBITDA margins of 22% . Cabot's LITX® and ENERMAX® conductive additive brands are enabling superior battery performance in both EVs and Battery Energy Storage Systems (BESS).

Key growth drivers:

• Global lithium-ion battery demand projected to grow at ~20% CAGR through 2030
• BESS demand expected to grow at ~26% CAGR, accounting for 30% of global battery demand by 2030
• BESS growth supported by UPS needs for AI data centers and renewable energy grid integration

PowerCo Supply Agreement (Volkswagen)

Cabot signed a multi-year supply agreement with PowerCo, a subsidiary of Volkswagen Group — the second-largest auto producer globally — to supply conductive carbons and dispersions for lithium-ion battery applications . VW has made clear its strategic intent to produce a substantial portion of its own batteries through the build-out of several Gigafactories, and this agreement positions Cabot at the center of that strategy . The deal marks a "significant milestone" in Cabot's strategic growth in Battery Materials and establishes incumbency in Western geographies as gigafactories are built there .

Capital Allocation

Despite the challenging environment, Cabot continued its shareholder-friendly capital allocation :

The balance sheet remains healthy with net debt to EBITDA of 1.2x and $230 million cash on hand .

Segment Deep Dive

Reinforcement Materials — Under Pressure

The segment that generates the majority of Cabot's revenue faced significant headwinds:

Root causes: Lower tire production levels in Americas, year-end inventory management by tire customers, and increased competitive intensity in Asia Pacific .

Performance Chemicals — Bright Spot

Drivers: Higher gross profit per ton from favorable product mix and cost optimization, partially offset by weaker European demand . Battery Materials continues to gain momentum with 39% revenue growth YoY and TTM EBITDA margins of 22% .

Historical Context: Adjusted EPS Trend

*Values retrieved from S&P Global

The trend shows Cabot's earnings peaked in mid-FY2025 and have since declined as Reinforcement Materials volumes contracted.

Risks and Concerns

1. Tire import competition: Elevated tire imports into Americas and Europe continue to pressure domestic tire production and Cabot's Reinforcement Materials volumes

2. Calendar year 2026 tire contracts: Guidance "incorporates the outcome of negotiations for our calendar year 2026 tire customer agreements" — implying potential pricing pressure

3. Asia Pacific competitive intensity: Increased competition in the region added to volume pressures

4. FX and currency risks: Results include exposure to Argentina peso devaluation and other foreign currency fluctuations

Drivers of Future Demand Growth

Reinforcement Materials recovery potential:

• GlobalData forecasts domestic tire production in western regions returning to growth in calendar years 2026 and 2027
• Effective tariffs and anti-dumping duties could moderate import levels and support domestic tire production
• Delayed tire replacement cycles present pent-up demand opportunity
• Global tire manufacturers leveraging Tier 2 brands could support increased domestic production

Performance Chemicals tailwinds:

• EV and BESS growth driving Battery Materials demand
• GDP-plus growth expected in consumer and infrastructure applications as demand recovers
• Interest rate cuts and easing inflation could unlock pent-up demand in consumer durables

Forward Catalysts

• Q2 FY2026 Earnings: Expected early May 2026
• Battery Materials growth: PowerCo SE agreement contributions and continued EV/BESS adoption
• Cost reduction actions: $30M targeted savings plus capacity rationalization in Americas & Europe
• Tire industry normalization: GlobalData forecasts recovery in CY2026/2027

Key Management Quotes

"I am pleased that despite a challenging demand environment, we continued to execute well and delivered Adjusted EPS of $1.53 in the quarter." — Sean Keohane, CEO

"While the demand environment in Reinforcement Materials remains challenging and continues to be impacted by elevated levels of tire imports into the western geographies of Europe and the Americas, we are focused on countermeasures to manage this impact." — Sean Keohane, CEO

"Building out our position in [Battery Materials] remains a strategic priority for Cabot given the expected continued global growth in electric vehicles and energy storage applications." — Sean Keohane, CEO

Q&A Highlights

On Calendar Year 2026 Contract Pricing

Pricing in the CY2026 reinforcement materials agreements declined 7-9% year-over-year across Western regions, reflecting competitive pressures from elevated tire imports and below-80% carbon black industry utilization rates in the Americas . In Europe, challenges were "even more pronounced" with both pricing and volume losses as tire imports increased 8% through November 2025 .

On PowerCo Supply Agreement

CEO Keohane provided additional color on the multi-year PowerCo agreement, revealing that PowerCo is a subsidiary of Volkswagen Group — the second-largest auto producer globally with a "broad and deep lineup of electric vehicles" . VW has strategic intent to produce a substantial portion of its own batteries, and this agreement positions Cabot "squarely at the center of that strategy" .

"Securing this agreement not only reinforces our leadership position in conductive additives, formulations, and blends for lithium-ion battery applications, but it also creates a strong foundation for growth as PowerCo scales its operations." — Sean Keohane, CEO

On Mexico Acquisition

The acquisition of a carbon black plant in Mexico closed at the end of January with results consolidating starting in February . The plant is strategically located near Cabot's existing Altamira facility, providing operational synergies . Importantly, the deal includes a long-term supply agreement with Bridgestone to provide materials back to Bridgestone for tire production in Mexico and the Americas .

On Tire Import Trends

Management noted recent positive signals:

• Americas: Tire imports from Asia have declined sequentially in recent months but remain up ~4% YoY
• Brazil: Tariffs have helped slow Chinese tire imports, with passenger car tire imports down 4% YoY in 2025
• Europe: Few protection measures implemented to date; anti-dumping petition under review with determination scheduled for June 2026

On January Volume Trends

Volumes in January are up slightly year-over-year in the Americas and running about 15% above December levels (consistent with normal seasonal patterns after year-end inventory management) .

On Tariff Exposure

When asked about cross-border exposure to tariffs, CEO Keohane emphasized that Cabot is "largely a make-in-region, sell-in-region" model . While some specialty Performance Chemicals products move across regions due to unique technologies, these volumes are "quite small as an overall proportion of Cabot's sales" with no material tariff impacts to date .

On Contract Volume Outcomes

In terms of CY2026 contract volumes:

• Americas: No real change in share position — volumes expected to grow with market (roughly flat)
• Europe: Lost volume in contract negotiations — European volumes expected to be down in FY2026

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