Cabot Corporation

participants on 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 Della Hunt, Vice President, Treasurer, and Investor Relations. Please go ahead.

Thank you, Olivia. 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 year 2025, 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, 2024, 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 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 first quarter highlights follow the company's recent cash flow performance, and then discuss the key takeaways from our recent investor day we held in December. Erica will review the first 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. Welcome to our call today. In the first fiscal quarter, we continued to execute at a high level in a mixed economic environment. generating results in line with our expectations and leading to EBIT growth in both of our segments. We delivered adjusted earnings per share of $1.76, which is up 13% as compared to the same period in the prior year, positioning us well with a strong start to fiscal year 2025. I would like to thank our entire Global Cabot team for their agility and continued commitment to execution as we navigate these dynamic times. EBIT in reinforcement materials was $130 million, up 1% year-over-year in what remains a challenging global environment. Results in this business continue to demonstrate the value of the structural improvements we have made over the years to the business and our continued commitment to commercial and operational excellence. EBIT in performance chemicals was up 32% compared to the first quarter of fiscal 2024, largely due to higher volumes as demand in the segment has generally stabilized and volumes have reconnected to underlying demand drivers in key end markets. Cash flow was strong in the quarter, which supported investments in maintenance, compliance, and growth capital projects, as well as the return of cash to shareholders through a combination of share repurchases and dividends. The Cabot portfolio has strong cash flow characteristics which enables a balanced capital allocation strategy focused on funding our high confidence, high return growth projects, and returning cash to shareholders. This balance of profit growth and cash return can be achieved while maintaining our strong investment grade balance sheet. In the quarter, we generated operating cash flow of 124 million. We also invested 77 million in capital expenditures which included growth investments to construct our new Indonesia capacity for reinforcement materials and capacity for growth and battery materials. We also returned 66 million to shareholders through 24 million of dividends and 42 million of share repurchases. Since fiscal 2015, our dividend per share has grown at a compound annual growth rate of 8%. We remain committed to a continuous and growing dividend and expect to maintain an industry competitive dividend yield and payout ratio over time. We also believe that share repurchases are an attractive use of cash. In this quarter, we purchased 42 million of shares. Looking over a longer horizon, we've reduced our outstanding share count by 13% since fiscal 2015, as we have maintained a steady commitment to share repurchases. During the quarter, we also held an investor day in December. We appreciate the support from our investors as we had a great turnout. I'd like to now provide a brief recap of this event. During the day, we reviewed the successful achievement of our 2021 investor day goals, discussed our company vision and strategy, provided an outlook for our segments, and communicated an updated set of three-year financial targets. As I shared at Investor Day, I believe that Cabot offers a compelling investment thesis. Our Creating for Tomorrow strategy is the right one to drive continued growth and shareholder value creation. This strategy is built on the pillars of grow, innovate, and optimize, and we drive execution with a disciplined operating platform of commercial and operational excellence. Our excitement and confidence in our outlook for growth is underpinned by our global footprint and the strong product portfolio that is aligned with three key macro trends. The first macro trend is the changing mobility landscape towards electric vehicles, which is expected to drive growth across the Cabot portfolio. Second, the build out of global infrastructure is expected to drive demand for important applications in our portfolio, from specialty carbons for power distribution cables to fume silica for wind turbine blades. And third, the sustainability transition, where our customers are increasingly seeking more circular and sustainable offerings to meet the needs of their downstream customers. We have set clear growth goals targeting an adjusted earnings per share CAGR of 7 to 10% over the next three years, with growth expected in both business segments. This management team has a proven track record of execution over a long period of time, and we are committed to continuing that high level of execution going forward. And finally, cash flow and capital allocation. The Cabot portfolio has strong cash flow characteristics, and this is the source of our value creation strategy. We expect to continue growing the discretionary free cash flow of the company And we'll deploy that cash in a balanced and disciplined fashion with a focus on funding advantage growth investments and returning significant levels of capital to shareholders. The execution of our strategy has driven exceptional shareholder value creation over the last three years. We are very proud of that track record and are confident we'll continue to do the same in the coming years. I'll now turn the call over to Erica to discuss the segment and financial performance in the quarter. Erica?