Cabot Corporation

Hello, and welcome to the Q4 2021 Cabot Earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Mr. Steve Delahunt. Please go ahead, sir.

Thanks, Lisa. Good morning. I would like to welcome you to the Cabot Corporation Earnings Teleconference. With me today are Sean Cohane, CEO and President, and Erica McLaughlin, Senior Vice President and CFO. Last night, we released results for our fourth quarter of fiscal year 2021, copies of which are posted in the investor relations section of our website. The slide deck that accompanies this call is also available in the investor relations portion of our website and will be available in conjunction with the replay of the call. During this conference call, we will make forward-looking statements about our expected future operational and financial performance. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading Forward-Looking Statements in the press release we issued last night and in our annual report on Form 10-K for the fiscal year ended September 30, 2020, in subsequent filings we make with the SEC, all of which are available on the company's website. In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. Any non-GAAP financial measure presented should not be considered to be an alternative to financial measures required by GAAP. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measure in a table at the end of our earnings release issued last night and available in the Investors section of our website. Also, as we do typically each year, I would like to remind you that over the next several weeks, in connection with the vesting of restricted stock awards issued under our long-term incentive equity program, officers of the company will be selling shares to pay tax and other obligations related to their rewards. I will now turn the call over to Sean, who will discuss the fourth quarter and full year highlights. Erica will review the business segment and corporate financial details. Following this, Sean will provide closing comments and open the floor to questions. Sean?

Thank you, Steve. Good morning, ladies and gentlemen, and welcome to our call today. At this time last year, I talked about being prepared to win as the recovery takes hold, and I think 2021 is evidence that we were prepared. Fiscal 2021 was a remarkable year for Cabot as the business recovered from the 2020 COVID lows to deliver record results. We accomplished this through a combination of extraordinary execution and our commitment to driving growth through differentiated investments. I would like to spend a little time now recapping the accomplishments of the year. The Cabot operating model is built on the foundations of commercial and operational excellence, and our strength in these disciplines drove our outstanding results in fiscal year 2021. We delivered record adjusted earnings per share of $5.02 and total segment EBIT of $550 million. And our focus on cash resulted in a record discretionary free cash flow of $353 million. The macro environment in 2021 required resilience and agility, and I'm very proud of the Cabot team and how they worked tirelessly to support our customers' evolving needs. Serving our customers and innovating to grow with them is what motivates our team. This was made more challenging in 2021 given the myriad global supply chain disruptions that companies face and the fact that necessary COVID safety protocols continue to evolve and adjust our normal ways of working. Additionally, companies experienced sharply rising input costs, which required dynamic commercial management. Our teams worked closely with our customers to manage through this environment, and we were successful in our pricing efforts to ensure our margins remained robust and we could invest to support our customers' long-term supply needs. Fiscal year 2021 marked the sixth year of our Advancing the Core strategy, and I am very pleased with our record of execution and the growth prospects for our company. Adjusted earnings per share has grown at a compound annual growth rate of 11% since the inception of our strategy, ahead of our 7% to 10% target. A growth focus built around our core segments and disciplined execution have been the hallmarks of our approach. As pleased as we are with the results since 2015, I am even more excited about the growth opportunities that lie in front of us and the progress we made in 2021. Our growth strategy is built on a philosophy of investing from positions of strength and where we have what we call a right to win. A few highlights from 2021 are particularly noteworthy. Our unmatched portfolio of conductive carbon additives and our strong customer-focused model resulted in a doubling of revenue in our battery materials business year over year. We are progressing with the specialty carbons conversion of our plants in Shuzhou, China, and this investment will provide growth across our broad range of specialty carbon applications and will free up additional capacity to support battery materials. Our inkjet business is well positioned to capitalize on the shift in the commercial and packaging segments from analog to digital printing, and we achieved multiple OEM qualifications in 2021 that set us up well for growth as inkjet presses penetrate these markets. And finally, we continued with the execution of a project to build a specialty compounds production line in Cilugan, Indonesia, which will allow us to meet customer demand for Black Master Batch in this high-growth region. While growth and execution are highlights from 2021, these accomplishments have been achieved with sustainability at the core. We continued our sustainability journey in 2021 with several noteworthy accomplishments. First and foremost, we committed to align our disclosures with the recommendations of the Task Force for Climate-Related Financial Disclosure, or TCFD, and we engaged a third party to help us evaluate climate risks and opportunities following the TCFD guidelines. We intend to share the results of this work in the coming months. While the operating rhythm of 2021 was challenging, I am very proud of our performance in employee safety. Our total recordable incident rate of 0.34 keeps us firmly in the upper echelon of chemical and industrial companies. We also completed a major air emissions control project at our carbon black manufacturing facility located in Louisiana. This investment in control technology will result in improved air quality through the substantial elimination of nitrogen oxides and sulfur dioxide emissions, and will ensure that we can support our customers' supply needs in a sustainable fashion over the long term. In addition, waste heat from the plant is being recovered and used to generate up to 50 megawatts of co-gen power without creating any additional emissions. In August, we announced a new $1 billion revolving credit facility that has pricing that is based on the company's credit ratings as well as our performance against annual intensity reduction targets for sulfur dioxide and nitrogen oxide emissions. The transaction reinforces our commitment to sustainability and was one of the first sustainability-linked revolving credit agreements in the U.S. chemical industry. Lastly, as a chemical industry, we need to attract the next generation of talented and diverse candidates into our field of chemistry. In support of this aim, Cabot is taking part in an industry effort to support the Future of STEM Scholars Initiative, or FOSSE, which focuses on creating pathways for students at historically black colleges and universities to enter and succeed in STEM careers within the chemical industry. This initiative will have a lasting and transformational impact on the students and our industry. and we are proud to be an inaugural sponsor. Overall, we had a very successful 2021 in terms of financial performance and progress against our strategic objectives. This well-rounded performance is a testament to the positioning of our portfolio and our exceptional team. Now a few comments on the fourth quarter. I am pleased to report solid fourth quarter results with adjusted earnings per share of $1.11. This performance was 63% above the same quarter last year, despite the effects of the semiconductor chip shortage and ongoing global supply chain disruptions, as well as a higher level of maintenance spending due to the timing of turnarounds. We also continued the momentum of battery materials and ended the year with EBITDA in our previously communicated range of $15 to $20 million. Cash flow from operations was strong at $100 million in the quarter, despite the impact of higher raw material prices. I'll now turn the call over to Erica to discuss the financial results of the quarter in more detail. Erica?