Cabot Corporation

Good day, everyone, and thank you for standing by. Welcome to the fourth quarter 2024 Cabot 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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your questions, simply press star 11 again. Please re-advise that today's conference is being recorded. Now I will pass the call over to the Vice President, Treasurer and Investor Relations, Steve Delahunt. Please go ahead.

Thanks, Carmen, 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 fourth 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 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, 2023, and in subsequent filings we make with the SEC, all of which are also available on the company's website. In order to provide great transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. Any non-GAAP financial measures 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 the table at the end of our earnings release issued last night and available in the investor section of our website. Also, as we typically do each year, I'd 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 our success against our 2021 investor day objectives, followed by our fiscal 2024 highlights, including our cash flow results and capital allocation for the year. And finally, our 2024 sustainability highlights. Erica will review the corporate financial details and business segment results for the fourth quarter and fiscal year. Following this, Sean will provide a 2025 outlook and some closing comments and open the floor to questions.

Sean? Thank you, Steve. Good morning, ladies and gentlemen, and welcome to our call today. Fiscal year 2024 was one marked by tremendous accomplishments for our companies. We concluded our 2021 investor day three-year goal period, having achieved an adjusted earnings per share growth CAGR of 12%, which represents the top end of our target range of 8% to 12%. We also generated $1.2 billion of cumulative discretionary free cash flow over that three-year period, a very strong result compared to our investor day goal of greater than $1 billion. During our investor day in 2021, we launched our Creating for Tomorrow strategy. This strategy seeks to leverage our global leadership, innovation capabilities, and commitment to operational excellence to drive strong growth of earnings and cash flow. When we set our three-year targets in December of 2021, we made certain demand and market assumptions based on the environment at that time. While many of those key assumptions turned into headwinds since 2021, particularly the end market growth rates and foreign exchange rates, it hasn't impacted our focus on achieving our corporate objectives. I am immensely proud of the entire CABA team, resilience and agility they demonstrated in navigating a turbulent global economic environment these past three years, always maintaining a focus on supporting our customers and delivering on our commitments. In fiscal year 2024, we delivered adjusted earnings per share of $7.06, an increase of 31% year over year, and total segment EBIT of $701 million, an increase of 15% year over year. In our business segments, reinforcement materials EBIT increased 11% year over year to $537 million. driven by higher volumes and improved pricing and product mix in our 2023 and 2024 customer agreements. Performance chemicals segment EBIT increased 31% year-over-year to $164 million as we saw our volumes reconnect with underlying demand in the second half of the fiscal year and a more normalized product mix that drove improved margins. The Cabot portfolio has robust cash flow characteristics, and our performance in fiscal 2024 marked a continuation of those fundamentals. In the fiscal year, we generated strong operating cash flow of $692 million and discretionary free cash flow of $479 million. Our cash generation power is the source of our shareholder value creation strategy. With these strong cash flows, we seek to allocate capital inside a balanced framework focused on three priorities. First, ensuring our asset base is well maintained to provide a reliable and sustainable offering to our customers. Second, underwriting high confidence growth projects to deliver long-term earnings growth. And third, returning capital to shareholders through dividends and share repurchases. The strength of our cash flow allows us to execute against these priorities while maintaining our strong investment-grade balance sheet. In fiscal year 2024, we paid $93 million in dividends, including an 8% increase announced last May, reflecting our confidence in the long-term cash flow outlook for our company. We have maintained a continuous and growing dividend since 1968, and we would expect to continue raising the dividend over time as our earnings grow. We also repurchased 172 million of shares in fiscal year 2024, which combined with dividends totaled 265 million of capital returned to shareholders, representing approximately 55% of discretionary free cash flow. Going forward, we feel very good about our cash generation power, balance sheet flexibility, and future growth investment opportunities to continue driving top tier shareholder returns. Now turning to sustainability. Fiscal year 2024 has been a dynamic year of progress marked by several key sustainability achievements. As we integrate sustainability into our Creating for Tomorrow strategy, we think about it in terms of being a responsible operator and through the lens of enabling applications for our customers. Ultimately, our investments in this space must generate returns because they drive efficiency in our operations through circularity, are valued by our customers and their downstream consumers, or are enabling new vectors of growth. 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 future. At that time, we had achieved nine of our 14 2025 sustainability goals ahead of schedule, while we continue to progress to target on the remaining goals. Among the key milestones, we achieved our goal of exporting 200% of the energy that we import, exemplifying our commitment to circularity by leveraging the waste energy in our manufacturing process to produce cogeneration power, which is CO2-free and provides a valuable profit stream. Our customers continue to seek more circular and sustainable products as they drive their growth strategies, and this represents a long-term innovation opportunity for Cabot. In fiscal year 2024, we introduced several new products made with sustainable materials, including our new universal circular black master batches designed to deliver reliable performance, quality, and consistency across multiple applications. We also launched Propel E8 engineered reinforcing carbon black, promoting enhanced efficiency and increased durability for EV and high performance tire formulations. Our leadership and sustainability continues to be recognized externally. We again achieved a platinum rating from EcoVedas, marking the fourth consecutive year and placing us in the top 1% of the basic chemical sector. Additionally, our E2C product earned the Tire Technology International 2024 award for innovation and excellence, highlighting our contributions to more sustainable tire development. And finally, We are proud to have been selected by the U.S. Department of Energy for a grant to support the build out of the domestic battery chemistry supply chain. I'd like to take a few minutes now to elaborate on this DOE grant selection. In September, Cabot was selected for a $50 million grant by the U.S. Department of Energy as part of the bipartisan infrastructure law. We are now in negotiations to finalize the terms of that award. The grant will be used to develop a new US-based manufacturing facility to produce battery-grade carbon nanotubes and conductive additive dispersions at commercial scale. With our broad portfolio of conductive additives for the battery industry and our established relationships with the leading battery manufacturers globally, we are well positioned to capitalize on the growth opportunity as gigafactories are constructed here in North America. This investment will help us scale the production of domestic capacity and accelerate the U.S. battery chemistry value chain. We continue to believe that battery materials will be an important growth driver to Cabot's earnings over time as the production of batteries bifurcates into a Western market and a China market. We look forward to working closely with the Department of Energy and our stakeholders to ensure the success of this important project. Overall, we had a very strong year in 2024 and it well positioned for the future. I'll now turn the call over to Erica to discuss the financial and performance results of the quarter in more detail. Erica.