Cabot Corporation

Good day. Thank you for standing by. Welcome to Canvas' third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Steve Delhunt, Vice President, Treasurer, and Investor Relations. Please go ahead.

Thanks, Livia, and good morning. I'd 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 third quarter of fiscal year 2024, 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, 2023, and in subsequent filings we make with the FCC, 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 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 investor section of our website. I will now turn the call over to Sean, who will discuss the third quarter highlights, followed by our progress in the area of sustainability, and the company's recent cash flow performance. Erica will review the third quarter financial highlights and the business segment results. Following this, Sean will provide a strategic summary and closing comments and open the floor to questions. Sean?

Thank you, Steve, and good morning, ladies and gentlemen, and welcome to our call today. I'm very pleased with our performance in the third quarter. as adjusted earnings per share was up 35% to $1.92 compared to the same period in fiscal 2023. This level of performance reflects the continued strength of the reinforcement materials segment and a recovery to more normalized volume levels in the performance chemical segment after the destocking that took place last year. EBIT and reinforcement materials grew 3% year over year to $136 million marking the second best quarter in history. This result was achieved despite some weather-related events in Mexico and Brazil that impacted volumes in the quarter and a less favorable regional mix. In the performance chemical segment, EBIT increased 72% year-over-year, driven by strong volume growth and a return to a more normalized product mix. It is encouraging to see that demand in strategic high value applications such as automotive and semiconductors rebounded to more normalized levels and reconnected to underlying demand after a very prolonged destocking cycle. Furthermore, our products targeted to strategic infrastructure applications continue to build momentum. Cash flow generation remains strong in Q3 with operating cash flow of $207 million. We returned $73 million of cash to shareholders in the third quarter of 2024 through a combination of share repurchases and dividends consistent with our balanced approach to capital allocation. And finally, we are proud to have earned the top rating of platinum from EcoVedas for the fourth consecutive year, reflecting our continued leadership in sustainability. At Cabot, sustainability is embedded in all that we do. beginning with our purpose of creating materials that improve daily life and enable a more sustainable future. Our customers continue to seek more sustainable and circular solutions, and they want to align with suppliers that report goals and progress in a transparent way. To this end, in June, we published our 2024 sustainability report, highlighting our recent performance and advancements toward our 2025 sustainability goals, as well as our vision for enabling a more sustainable world. We continue to make significant progress in advancing our sustainability agenda and have achieved nine of our 2025 sustainability goals ahead of schedule. Among these achievements is our target to export 200% of the energy that we import. This accomplishment exemplifies our commitment to circularity by utilizing waste energy in our manufacturing process to produce cogeneration power, which is CO2 free. Cabot has long been a leader in sustainability and has been recognized by numerous external parties for our performance. Fiscal year 2024 marks another significant year of progress in our sustainability journey as evidenced by our platinum rating from EcoVedas. EcoVedas is one of the world's leading sustainability ratings platforms and one that many of our customers rely upon to evaluate their supply chains. Their platinum rating acknowledges Cabot's environmental, social, and governance efforts and places us among the top 1% of companies assessed by EcoVedas. In the third quarter, we also announced that we attained Operation Clean Sweep certification in Europe at our two master batch and compounding facilities in Belgium. We are one of the first black master batch manufacturers in Europe to earn this third-party certification. Since 2019, Cabot has pledged its support for Operation Clean Sweep, having launched comprehensive plans to implement these protocols at our operations. Achieving certification at these facilities is a continuation of these efforts and further testament to our commitment to responsible management practices that reduce plastic waste in the environment. Finally, We also continue to progress our Evolve Sustainable Solutions portfolio with the launch of our new Replazz Black Universal Circular Black Master Batches powered by Evolve Sustainable Solutions. This launch introduced two new products, which are the industry's first ever Universal Circular Black Master Batches with International Sustainability and Carbon Certification, or ISCC Plus certified content. These solutions offer customers an ISCC Plus certified single master badge for use in a wide range of automotive applications for coloring polyolefins and many engineering plastics. Generating strong levels of discretionary free cash flow has been a strategic objective for this management team dating back to 2016. The Cabot portfolio exhibits strong cash flow characteristics, and we bring a disciplined approach to execution to ensure robust cash flow levels. Over time, through disciplined execution of our strategy, we have increased our level of discretionary free cash flow from an average of $244 million per year from 2016 through 2019 to a level of approximately $370 million per year from 2021 through 2023. In fiscal year 2024, we are on track to deliver a new higher level of discretionary free cash flow and to achieve our 2021 investor day target to generate cumulative discretionary free cash flow of greater than $1 billion between fiscal year 2022 and 2024. This level of cash generation supports our balanced capital allocation framework, which has remained consistent. We will prioritize high-confidence, high-return growth investments where we feel we have a right to win and that we believe will grow the long-term earnings of the company. These investments would include organic growth projects as well as potential bolt-on acquisitions that support our strategy. We expect to maintain an industry-competitive and growing dividend, and we continue to expect to opportunistically repurchase shares. We believe we can do all of this while maintaining our investment-grade credit rating. The strength of our cash flow generation and disciplined capital allocation are fundamental to the strong cabinet investment thesis and a priority for this management team. I will now turn the call over to Erica to discuss the financial and performance results for the quarter in more detail. Erica?