Cabot Corporation

a day and thank you for standing by. Welcome to the Cabot second quarter 2025 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 automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Delahunt, Vice President, Treasurer, and Investor Relations. Please go ahead.

Thanks, DeeDee, 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 second 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 available on the company 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 second quarter highlights and the expected impacts to our business from recent tariff announcements. Erica will review the second quarter financial highlights and the business segment results. Following this, Sean will discuss our outlook for fiscal 2025 and then open the floor to questions.

Sean? Thank you, Steve. Good morning, ladies and gentlemen, and welcome to our call today. I am pleased with our strong second quarter results, which were in line with our expectations. We delivered Q2 adjusted earnings per share of $1.90, which is up 7% as compared to the same period in the prior year. When combined with first quarter results, adjusted earnings per share grew 10% in the first half of fiscal 2025 as compared to the same period in fiscal 2024. Overall, we continue to execute at a high level and demonstrate agility in this dynamic and challenging macroeconomic environment. EBIT and reinforcement materials was 131 million, up 1% sequentially and down 12% year over year. Results in this business remain strong despite the volume headwind from lower tire demand within the quarter. Even in performance, chemicals was up 61% compared to the second quarter of fiscal 2024, driven by improved margins and higher volumes, particularly in the fume silica product line. Volumes in the segment have generally stabilized and reconnected to underlying demand drivers in our key end markets. Additionally, we continue to make strong commercial progress in the battery materials product line, generating year-over-year volume growth of 10% in the first half of fiscal 2025 with a solid level of profit growth. Our strategy is to focus on the high-performance segment of the market in China with differentiated products, while developing the business with customers that are building battery plants in the Western economies. While the development of battery production in North America and Europe is developing more slowly than originally anticipated, we continue to believe these markets will become large and therefore remain a key growth priority for us. Returning capital to shareholders remains an important component of our capital allocation framework, and in the quarter, we returned 70 million to shareholders through a combination of share repurchases and dividends. Given the strength of our underlying business fundamentals and conviction in the long-term cash flow generation of our portfolio, yesterday we announced a 5% increase in our quarterly dividend. This is consistent with our capital allocation framework to increase the dividend as our earnings and cash flows grow. We have increased our annual dividend per share payment every calendar year for the last 10 years. As a result of the recent tariff announcements, I thought it would be helpful to provide more detail on our direct tariff exposures by region. Given that we have a make and sell in region model, our businesses are largely insulated from direct tariff impacts, and we are well positioned to support our customers and capture growth from shifting downstream supply chains. In each of our major regions, the Americas, EMEA, and Asia Pacific, At least 95% of our volumes within those regions are produced in that same region. Specifically in North America, our products are considered USMCA compliant, and therefore we expect no impact at this time from any tariffs in this region. Between the major regions, there are small amounts of cross-border sales for some of our high-end specialty products where we are directly exposed to tariff increases. In those cases, we expect to be able to pass on any tariffs through contractual formulas and by implementing increases in spot pricing. While the current tariff landscape is highly dynamic, with varying levels of implemented, proposed, and paused tariffs around the world, the Cavit team continues to respond well in support of our customers, and we believe that our direct exposure is manageable. The uncertainty is, however, causing customers to adopt a cautious posture in the short term around inventory levels, as we are seeing signs of customers curtailing production to reduce inventory levels and manage risk until the trade picture becomes more clear. To address the uncertainty caused by tariff policies, we are executing a broad range of countermeasures. First and foremost, we are working closely with our customers to understand how their production might shift as a result of tariffs policies and offering volume support from our expansive global plant network. In the limited number of cases where our products are exposed to direct tariffs, we expect to recover the impacts through formula and spot pricing adjustments. We expect our near-term volumes to be impacted by customers adopting a more cautious approach to inventory levels and are implementing a range of product optimization actions across our global plant network. We are also executing fixed cost and procurement initiatives that we expect will contribute $30 million of savings in fiscal year 2025. And finally, we will adjust the timing of some capital projects to align with customer demand, resulting in a lower CapEx forecast, which is now expected to be in the range of $250 to $275 million. Despite the uncertainty caused by tariff policies, we believe the fundamentals of our company remain very strong and are creating for tomorrow strategy positions as well for long term shareholder value creation. There are several features of our company that we believe distinguish us from competition and set us up for long term success first. Cabot is a global company with assets and sales that are relatively equally distributed across the three major regions of the world, the Americas, EMEA, and Asia Pacific. This balanced geographic footprint and model of make in region, sell in region is more important than ever in this changing global trade environment. In each of these regions, we have local assets and local management teams to serve our customers giving us unique market insights and the necessary experience to navigate local complexities and capture growth. We believe our track record of strong cash generation and our investment grade balance sheet allow us to weather economic cycles while enabling the capacity to fund strategic growth investments and return consistent, robust levels of cash to shareholders. As I mentioned earlier in my remarks, yesterday we increased our dividend by 5% and expect to return meaningful cash through share repurchases in fiscal 2025. And finally, I believe this management team has demonstrated a commitment to disciplined execution, resulting in our ability to navigate through dynamic macroeconomic environments while achieving our goals and delivering strong shareholder returns. I will now turn it over to Erica to discuss the financial results for the quarter. Erica?