Cabot Corporation

Ladies and gentlemen, thank you for standing by and welcome to Cabot's first quarter 2023 earnings conference call. After the speaker's presentation, there'll be a question and answer session. Instructions will be given at that time. Please be advised that today's conference may be recorded. I would like to turn the conference over to your speaker host, Steve Delahunt, Vice President, Treasury and Investor Relations. Please go ahead.

Thank you, Michelle, and 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, Executive Vice President and CFO. Last night, we released results for our first quarter of fiscal 2023, 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 in the press release we issued last night and in our 10-K for the fiscal year ended September 30, 2022, and in subsequent filings we make with the SEC, all of which are also 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. The non-GAAP financial measures referenced on this call reconcile 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 investor section of our website. I will now turn the call over to Sean, who will discuss the first core highlights. some recent recognition we received with respect to our leadership in ESG, and our progress in the area of battery materials. Erica will review the company and business segment results along with some corporate financial details. Following this, Sean will provide closing comments and open the floor to questions.

Sean? Thank you, Steve, and good morning, ladies and gentlemen. Welcome to our call today. I'm pleased with our first quarter results as they were in line with our expectations and the strategic developments that informed our full-year guide in November remain on track. As a result, we remain confident in our full-year outlook and are reaffirming our guidance range of adjusted earnings per share of $6.25 to $6.75. In the first fiscal quarter, we delivered adjusted earnings per share of $0.98. Despite significant headwinds, including lower demand in China due to significant levels of COVID outbreak, elevated levels of customer destocking across most value chains, and softness in key end markets and performance chemicals. EPIT and reinforcement materials was up 11% year-over-year, demonstrating the structural improvements we've made in recent years to the business and the resilience of the replacement tire market. We also concluded our tire customer contracts with better pricing than we originally forecasted back in November. underscoring Cabot's value proposition of supply reliability, quality, and sustainability. Further on the strategic front, Battery Materials continues to outperform the market with year-over-year volume growth of 63%. Overall, we are very pleased with our strategic progress, and we believe the company is well positioned for another year of earnings growth. Our leadership in ESG continued to be recognized in the quarter. First, we were named by Newsweek as one of America's most responsible companies. This is the fourth consecutive year that we've been included on Newsweek's list, which recognizes our strong performance in the areas of environmental, social, and governance. And we're very proud of this recognition. Second, we were named by Investors Business Daily as one of their 100 best ESG companies in 2022. The list recognizes companies with superior ESG ratings in addition to strong fundamental and technical stock performance. And finally, we recently have been named one of America's Great Workplaces for Diversity 2023 by Newsweek and Plant A Insights Group. This newly established list recognizes the top 1,000 companies in the U.S. that not only celebrate diversity, but implement policies that cultivate inclusive workplaces. Cabot received a five-star diversity score, the highest recognition available. This recognition is a testament to our efforts to promote and encourage diversity in all its forms. We look forward to continuing to advance our goals of fostering inclusion and supporting employee development, as well as increasing diverse representation across our company. Leadership in the space of sustainability is central to our strategy, and these forms of external recognition acknowledge our progress, and are a source of motivation for our employees. I look forward to updating you on further developments as we progress on our ESG journey. I've talked quite a bit about the growth in battery materials over the last few quarters, as I believe it represents a transformational opportunity for Cabot driven by growth in the demand for electric vehicles and lithium ion batteries. Global demand for critical battery materials, such as our conductive carbon additives, is expected to grow in the range of 20% to 30% annually over the next decade. Growth potential in the U.S. is expected to outpace global growth as penetration of EVs accelerates from what is a small fraction of car sales today. The U.S. growth is aided by recent U.S. government announcements targeted to accelerate the build-out of a domestic EV battery supply chain. As part of these efforts, federal and state governments have implemented a variety of programs in the form of grants, loans, and tax incentives. To meet the growth expectations of our customers, we recently announced plans to add conductive carbon additives capacity in the United States. This investment, located at our existing facility in Tampa, Texas, is part of an approximately $200 million planned investment program over the next five years. In addition to the Pampa conductive carbons expansion, we also intend to invest in a new CNT dispersion capacity in the U.S., which will bring together the powerful combination of conductive carbons, carbon nanotubes, and blends, offering our customers optimal performance and formulation flexibility. These capacity investments will also support the critical need of our customers for domestic supply. During investor day in December of 2021, we outlined the capacity investment program that would add approximately 30,000 metric tons of CCA capacity through 2024. These projects are all on track for completion by 2024 and support our communicated growth target of 50% plus for battery materials through 2024. The Pampa expansion will add an additional approximately 15,000 metric tons of conductive carbon capacity driving growth from 2025 and beyond. At Cabot, we've been building out our battery materials CCA product line for several years and have been extending our leadership position in this transformational space. We currently have established CCA capacity for battery materials in the U.S., Europe, and Asia, which provides our customers with security of supply, but also gives Cabot an advantage over many competitors which are largely operating in the Asia region. Our global footprint gives us the opportunity to expand capacity quickly to meet the expected sharp ramp in demand from our customers. At Cabot, we have the flexibility to either expand on existing sites or upgrade current assets to produce battery materials products, as we're currently doing in Tianjin, China. Our ability and track record to quickly scale up capacity additions is something that our customers value in Cabot, and this directly supports their imperative to regionalize the materials supply chain. We believe our broad offering of CCAs along with our existing network of plants and the talent of our people uniquely positions Cabot to support the growth expectations of our customers here in the U.S. The planned investments are another step in our strategy to capitalize on the fundamental transition from internal combustion engines to electric vehicles. Our planned investments will help support the electric vehicle transition and solidify Cabot as a global leader in battery materials. I will now turn it over to Erica to discuss the segment and financial performance. Erica.