Cabot 2025 Q3 Earnings Mixed Results as Net Income Rises 5.8%

Cabot reported fiscal 2025 Q3 results that showed a decline in revenue but an increase in net income. While revenue dropped 9.2% year-over-year, the company managed to maintain profitability, with a new record for Q3 net income. The firm reaffirmed its full-year guidance despite ongoing macroeconomic challenges and tariff uncertainties.

Revenue
Total revenue for Cabot declined by 9.2% to $923 million in fiscal 2025 Q3, down from $1.02 billion in the same period of the prior year. The Reinforcement Materials segment, which reported $573 million in revenue, experienced a 9% decline in global volumes, particularly in Asia Pacific and the Americas, with only a 4% increase in Europe, the Middle East, and Africa. The Performance Chemicals segment saw $320 million in revenue, though it faced 8% lower volumes driven by uncertainty around tariffs and a weaker macroeconomic climate. The Unallocated and Other category reported $30 million, primarily from shipping and handling fees and discounting charges for receivables.

Earnings/Net Income
Cabot’s earnings per share (EPS) for the quarter fell slightly by 4.6% to $1.87, while net income increased to $113 million from $120 million in 2024 Q3. Despite the modest EPS decline, the company set a new record for Q3 net income, marking its highest in over 20 years.

Price Action
The stock has shown resilience, rising 4.17% during the latest trading day, 7.42% for the week, and 2.21% month-to-date following the earnings report.

Post Earnings Price Action Review
A strategy of buying the CBOE S&P 500 ETF when Cabot beat revenue expectations and holding for 30 days proved effective, achieving a 79.65% return, outperforming the 71.15% benchmark by 8.51%. The strategy also demonstrated strong risk management, with a maximum drawdown of 0.00% and a Sharpe ratio of 0.59 during the backtest period.

CEO Commentary
CEO Sean Keohane praised the team’s performance, emphasizing disciplined execution and cost management amid challenging demand conditions. He highlighted the Reinforcement Materials segment’s 6% EBIT decline and the 4% increase in Performance Chemicals, both managed through cost and pricing optimizations. Keohane also noted strong operating cash flow of $249 million and the return of $64 million to shareholders through dividends and share repurchases.

Guidance
The company reaffirmed its fiscal 2025 Adjusted EPS guidance of $7.15 to $7.50, with current demand levels expected to position results in the middle to lower end of the range. Potential upside remains if recent tariff announcements boost Q4 demand. Cabot expects an operating tax rate of 27%-29% for the year and plans to continue prioritizing cost management, shareholder returns, and strategic growth investments.

Additional News
Cabot received a Platinum rating from EcoVadis for its sustainability performance for the fifth consecutive year. The company returned $64 million to shareholders through dividends and share repurchases during Q3, maintaining a Net Debt to EBITDA ratio of 1.3x and $1.4 billion in liquidity. Additionally, the firm reported $249 million in operating cash flow and is hosting an earnings call on August 5, 2025, at 8:00 a.m. Eastern time.