Cabot Corp (CBT) 2023 Q2 法說會逐字稿

Thank you for standing by, and welcome to Cabot's Second Quarter 2023 Earnings Conference Call. (Operator Instructions) I would now like to hand the call over to Vice President, Treasurer, Investor Relations, Steve Delahunt. Please go ahead.

感謝您的支持，歡迎來到卡博特 2023 年第二季度收益電話會議。 （操作員說明）我現在想將電話轉交給副總裁、財務主管、投資者關係史蒂夫·德拉亨特。請繼續。

Good morning. I would like to welcome you to the Cabot Corporation earnings teleconference. With me today are Sean Keohane, CEO and President; and Erica McLaughlin, Executive Vice President and CFO.

早上好。歡迎大家參加卡博特公司的收益電話會議。今天和我在一起的是首席執行官兼總裁 Sean Keohane；執行副總裁兼首席財務官 Erica McLaughlin。

Last night, we released results for our second quarter of fiscal year 2023, 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.

昨晚，我們發布了 2023 財年第二季度的業績，其副本發佈在我們網站的投資者關係部分。本次電話會議附帶的幻燈片也可在我們網站的投資者關係部分找到，並將與電話會議重播一起提供。

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, 2022, and in subsequent filings we make with the SEC, all of which are also available on the company's website.

在本次電話會議中，我們將就我們預期的未來運營和財務業績做出前瞻性陳述。每份前瞻性陳述都存在風險和不確定性，這些風險和不確定性可能導致實際結果與此類陳述中預測的結果存在重大差異。有關這些因素的更多信息出現在我們昨晚發布的新聞稿和我們截至 2022 年 9 月 30 日的財政年度的 10-K 中，以及我們隨後向美國證券交易委員會提交的文件中，所有這些信息也可在公司網站上找到.

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 Investors section of our website.

為了提高我們經營業績的透明度，我們參考了某些涉及對 GAAP 結果進行調整的非 GAAP 財務指標。本次電話會議中引用的非 GAAP 財務指標與我們昨晚發布的收益報告末尾表格中最直接可比的 GAAP 財務指標相一致，可在我們網站的投資者部分獲得。

I will now turn the call over to Sean, who will discuss the second quarter highlights, including progress against our sustainability strategy and an update on our Battery Material business. Eric will review the company and business segment results along with some corporate financial details. Following this, Sean will provide a strategic summary and closing comments and open the floor to questions. Sean?

我現在將電話轉給肖恩，他將討論第二季度的亮點，包括我們可持續發展戰略的進展以及我們電池材料業務的最新情況。 Eric 將審查公司和業務部門的業績以及一些公司財務細節。在此之後，肖恩將提供戰略總結和結束評論，並開始提問。肖恩？

Thank you, Steve, and good morning, ladies and gentlemen, and welcome to our call today. I am pleased with results in the second quarter and the tremendous effort of the Cabot team to execute against the challenging macroeconomic backdrop.

謝謝史蒂夫，女士們先生們早上好，歡迎來到我們今天的電話。我對第二季度的業績以及卡博特團隊在充滿挑戰的宏觀經濟背景下執行的巨大努力感到滿意。

In the second fiscal quarter, we delivered adjusted earnings per share of $1.33, in line with our expectations and up 35% sequentially.

在第二財季，我們實現調整後每股收益 1.33 美元，符合我們的預期，環比增長 35%。

Reinforcement Materials delivered a record quarter with EBIT up 21% year-over-year. The outlook for this business remains strong, driven by our leading market position, the long-term resilience of the replacement tire market and favorable structural dynamics in this business.

增強材料業務實現了創紀錄的季度業績，息稅前利潤同比增長 21%。在我們領先的市場地位、替換輪胎市場的長期彈性以及該業務有利的結構動態的推動下，該業務的前景依然強勁。

The Performance Chemicals segment had a challenging quarter as we experienced lower demand in China due to significant levels of COVID outbreak, softness in key end markets and continued inventory destocking.

由於 COVID 的嚴重爆發、主要終端市場的疲軟以及持續的庫存去庫存，我們在中國經歷了需求下降，因此高性能化學品部門的季度充滿挑戰。

As expected, cash flow was strong in the quarter with operating cash flow of $162 million and free cash flow of $111 million, of which we returned $37 million to shareholders through dividends and share repurchases.

正如預期的那樣，本季度現金流強勁，運營現金流為 1.62 億美元，自由現金流為 1.11 億美元，其中我們通過股息和股票回購向股東返還了 3700 萬美元。

Given the strength of our underlying business fundamentals and conviction in the long-term cash flow generation of our portfolio, yesterday, we announced an 8% increase in our quarterly dividend.

鑑於我們潛在的業務基本面的實力以及對我們投資組合的長期現金流產生的信念，昨天，我們宣布將季度股息增加 8%。

Cabot has a long history of growing the dividend and it would be our expectation to continue increasing the dividend over time as the earnings and cash flow of our business grow.

卡博特在增加股息方面有著悠久的歷史，隨著我們業務收益和現金流的增長，我們預計會隨著時間的推移繼續增加股息。

On the strategic front, we continue to make important long-term progress in Battery Materials with volumes growing 45% in the quarter despite a sharp sequential slowdown in electric vehicle sales in the March quarter.

在戰略方面，我們繼續在電池材料方面取得重要的長期進展，儘管 3 月季度電動汽車銷量連續大幅放緩，但本季度銷量增長了 45%。

Additionally, we secured another key customer win in the quarter and now have sales to 9 of the top 10 global battery manufacturers.

此外，我們在本季度贏得了另一個重要客戶，現在我們向全球 10 大電池製造商中的 9 家銷售產品。

Diving a bit deeper into Battery Materials. The electrification of mobility represents a significant growth opportunity for Cabot, and we continue to invest behind this macro trend. While we believe the long-term trend of electric vehicle penetration is undeniable, market developments from quarter-to-quarter can be [on EVA]. This is certainly what the electric vehicle sector experienced in the March quarter.

深入研究電池材料。移動電氣化對卡博特來說是一個重要的增長機會，我們將繼續投資支持這一宏觀趨勢。雖然我們相信電動汽車滲透的長期趨勢是不可否認的，但每個季度的市場發展可能 [on EVA]。這當然是電動汽車行業在三月季度所經歷的。

Electric vehicle sales declined sequentially by 27% in the March quarter, driven principally by COVID impacts in China and a sharp decline in prices of key raw materials for batteries such as lithium carbonate, which drove a sharp destocking across the industry value chain.

電動汽車銷量在 3 月當季環比下降 27%，這主要是受中國 COVID 影響以及碳酸鋰等電池關鍵原材料價格大幅下跌推動整個行業價值鏈大幅去庫存的推動。

While Cabot's volumes for battery materials continued to reflect strong year-over-year growth of 45%, sequential sales volumes decreased by 11%. We expect these impacts to be short term in nature and anticipate sequential improvement in the coming quarters in line with the Bloomberg EV forecast. So far through April, our volumes are aligned with this improving trend.

雖然卡博特的電池材料銷量繼續呈現 45% 的強勁同比增長，但環比銷量下降了 11%。我們預計這些影響本質上是短期的，並預計未來幾個季度將出現連續改善，與彭博 EV 預測一致。到目前為止，截至 4 月，我們的銷量與這種改善趨勢保持一致。

The temporary loss of market momentum sequentially in the second quarter and the projection for recovery of EV sales over the next 2 quarters puts us behind where we expected to be year-to-date in sales volumes for battery materials. Additionally, we are seeing some delays in battery production scale-up of a key U.S. auto OEM. Based on these factors and our continued investment profile to support long-term growth, we now anticipate fiscal year 2023 EBITDA to be in the range of $30 million to $35 million for battery materials.

第二季度市場動力的暫時喪失以及對未來兩個季度電動汽車銷量復甦的預測使我們落後於年初至今的電池材料銷量預期。此外，我們看到美國一家主要汽車 OEM 的電池生產規模擴大有所延遲。基於這些因素以及我們為支持長期增長而持續進行的投資狀況，我們現在預計 2023 財年電池材料的 EBITDA 將在 3000 萬至 3500 萬美元之間。

We continue to believe that electrification will transform the mobility sector and are very pleased with our commercial progress to date. We've been qualified and are selling commercially to 9 of the top 10 battery producers and are well positioned with key auto OEMs as they build out battery production capability.

我們仍然相信電氣化將改變移動行業，並對我們迄今為止的商業進展感到非常滿意。我們已經獲得資格並向前 10 大電池生產商中的 9 家進行商業銷售，並且在主要汽車原始設備製造商建立電池生產能力時處於有利地位。

Cabot's value proposition built on our unique product breadth, global footprint and ability to scale capacity to meet the industry's regionalization needs is resonating with customers. While the growth pathway may be uneven at times, we are investing to win over the long term and remain confident in our Investor Day projections of 50%-plus EBIT growth between 2021 and 2024.

卡博特的價值主張建立在我們獨特的產品廣度、全球足跡和擴展能力以滿足行業區域化需求的能力之上，正在引起客戶的共鳴。雖然增長路徑有時可能不平衡，但我們正在投資以贏得長期勝利，並對我們投資者日預測的 2021 年至 2024 年 50% 以上的息稅前利潤增長保持信心。

Sustainability is at the core of our purpose and are creating for tomorrow's strategy. And during the quarter, we made important progress on several strategic fronts. At the recent Tire Technology Expo in Hanover, Germany, we launched our EVOLVE Sustainable Solutions technology platform, which is focused on advancing sustainable reinforcing carbons.

可持續性是我們宗旨的核心，並且正在為明天的戰略而創造。在本季度，我們在幾個戰略方面取得了重要進展。在最近於德國漢諾威舉行的輪胎技術博覽會上，我們推出了我們的 EVOLVE 可持續解決方案技術平台，該平台專注於推進可持續增強碳。

Our goal through this technology platform is to develop products for our customers that offer sustainable content with reliable performance and importantly, at industrial scale. We plan to do this by leveraging circular value chains and materials recovered from end-of-life tires, using renewable or bio-based materials and enabling processes that reduce greenhouse gas emissions.

我們通過這個技術平台的目標是為我們的客戶開發產品，提供具有可靠性能的可持續內容，重要的是，在工業規模上。我們計劃通過利用循環價值鍊和從報廢輪胎中回收的材料、使用可再生或生物基材料以及實現減少溫室氣體排放的流程來實現這一目標。

As part of the EVOLVE platform, we also launched Cabot's first ISCC PLUS certified solutions, which are enabling our tire customers to bring demonstration products to the market made from circular materials. Our market leadership, global footprint and broad EVOLVE and E2C technology platforms, position Cabot to partner and win with leading customers as the mobility sector transitions to meet society's sustainability demands.

作為 EVOLVE 平台的一部分，我們還推出了卡博特的首個 ISCC PLUS 認證解決方案，使我們的輪胎客戶能夠將循環材料製成的示範產品推向市場。我們的市場領導地位、全球足跡和廣泛的 EVOLVE 和 E2C 技術平台，使卡博特能夠在移動行業轉型以滿足社會可持續發展需求的過程中與領先客戶合作並贏得勝利。

In addition, last week, we announced the launch of our new ENTERA aerogel particles portfolio. ENTERA aerogel particles are a thermal insulation additive targeted for thermal barrier solutions for electric vehicle lithium-ion batteries. We believe thermal management will be an important design feature of safe batteries and expect there will be a variety of application forms that serve this market.

此外，上週，我們宣布推出新的 ENTERA 氣凝膠顆粒產品組合。 ENTERA 氣凝膠顆粒是一種隔熱添加劑，適用於電動汽車鋰離子電池的隔熱解決方案。我們相信熱管理將是安全電池的一個重要設計特徵，並且預計會有多種應用形式服務於這個市場。

Cabot's aerogel products provide customers with formulation flexibility to develop very thin forms, including blankets, pads, sheets, films, foams and coatings. Over time, we believe that aerogel solutions can develop into a meaningful addition to our battery materials addressable market and further position Cabot as a critical material supplier to support the global transition to vehicle electrification.

卡博特的氣凝膠產品為客戶提供了配方靈活性，可以開發非常薄的形式，包括毯子、墊子、片材、薄膜、泡沫和塗層。隨著時間的推移，我們相信氣凝膠解決方案可以發展成為我們電池材料潛在市場的一個有意義的補充，並進一步將卡博特定位為支持全球向汽車電氣化過渡的關鍵材料供應商。

And finally, our sustainability leadership continues to gain recognition from leading ESG rating services. Most recently, Cabot received a platinum rating from EcoVadis, the highest recognition available for the third consecutive year.

最後，我們的可持續發展領導地位繼續獲得領先的 ESG 評級服務的認可。最近，卡博特獲得了 EcoVadis 的白金評級，這是連續第三年獲得的最高認可。

The platinum rating recognizes Cabot's environmental, social and governance efforts in place with Cabot among the top 1% of companies assessed by EcoVadis. EcoVadis is one of the world's leading sustainability ratings platforms and one that many of our customers rely on to evaluate their supply chains.

白金評級是對卡博特在環境、社會和治理方面所做努力的認可，卡博特在 EcoVadis 評估的公司中名列前 1%。 EcoVadis 是世界領先的可持續發展評級平台之一，我們的許多客戶都依賴該平台來評估其供應鏈。

I'll now turn the call over to Erica to discuss the segment and financial performance. Erica?

我現在將電話轉給埃里卡，討論該部門和財務業績。艾麗卡？

Thanks, John. I will start with discussing results for the company and then review the segment results. Adjusted EPS for the second quarter of fiscal 2023 was $1.33 compared to $1.69 in the second quarter of fiscal 2022, with growth in the Reinforcement Materials segment, offset by declines in the Performance Chemicals segment.

謝謝，約翰。我將從討論公司的業績開始，然後回顧分部業績。 2023 財年第二季度的調整後每股收益為 1.33 美元，而 2022 財年第二季度為 1.69 美元，增強材料部門的增長被功能化學品部門的下滑所抵消。

The quarter was also impacted by higher net interest expense of $7 million year-over-year and unfavorable foreign currency exchange impact of $7 million.

該季度還受到同比增加 700 萬美元的淨利息支出和 700 萬美元的不利外匯影響的影響。

Year-to-date impacts from increases in net interest expenses are $14 million, and our expectation for the fiscal year is unchanged from last quarter at approximately $20 million.

年初至今，淨利息支出增加的影響為 1400 萬美元，我們對本財年的預期與上一季度持平，約為 2000 萬美元。

Year-to-date unfavorable impacts from foreign currency exchange were $19 million, and we expect the year-over-year impact to be somewhat minimal going forward for the second half of the year.

年初至今，外匯帶來的不利影響為 1900 萬美元，我們預計今年下半年的同比影響將微乎其微。

Discretionary free cash flow in the quarter was $76 million, and we ended the quarter with $205 million of cash. Cash flow from operations was $162 million, which included a reduction in net working capital in the quarter of $59 million. The reduction was in line with what I highlighted in our expectation last quarter. And looking ahead, we expect a further reduction in net working capital in excess of $50 million over the 2 remaining quarters of the fiscal year based on the current future expectation for oil prices.

本季度可自由支配的自由現金流為 7600 萬美元，本季度末我們擁有 2.05 億美元的現金。運營現金流為 1.62 億美元，其中包括本季度淨營運資本減少 5900 萬美元。減少與我在上個季度的預期中強調的一致。展望未來，根據目前對油價的未來預期，我們預計本財年剩餘兩個季度的淨營運資本將進一步減少超過 5000 萬美元。

CapEx in the quarter was $51 million, and we expect full year CapEx to be between $250 million and $300 million. The balance sheet remains strong with total liquidity of $1.2 billion and net debt-to-EBITDA of 1.8x as of March 31.

本季度的資本支出為 5100 萬美元，我們預計全年資本支出將在 2.5 億美元至 3 億美元之間。截至 3 月 31 日，資產負債表依然強勁，總流動資金為 12 億美元，淨債務與 EBITDA 之比為 1.8 倍。

Our operating tax rate was 25% for the quarter, and we anticipate the fiscal year rate will be between 24% and 26%.

我們本季度的營業稅率為 25%，我們預計本財年的稅率將在 24% 至 26% 之間。

Now moving to Reinforcement Materials. During the second quarter, EBIT for Reinforcement Materials increased by $21 million as compared to the same period in the prior year to a record EBIT of $122 million. The increase was driven by improved unit margins from higher pricing and product mix in our 2023 calendar year customer agreements, partially offset by 7% lower volumes and higher fixed costs.

現在轉到增強材料。第二季度，增強材料的息稅前利潤與去年同期相比增加了 2100 萬美元，達到創紀錄的 1.22 億美元。這一增長是由於我們 2023 日曆年客戶協議中更高的定價和產品組合帶來的單位利潤率提高，部分被銷量下降 7% 和固定成本上升所抵消。

Globally, volumes were down in all regions in the second quarter as compared to the same period of the prior year, with declines of 2% in the Americas, 2% in Europe and 12% in Asia. Lower volumes in Asia were driven by the effects from the COVID outbreaks in China.

在全球範圍內，與去年同期相比，第二季度所有地區的銷量均有所下降，美洲下降 2%，歐洲下降 2%，亞洲下降 12%。亞洲銷量下降的原因是中國 COVID 疫情的影響。

Looking to the third quarter of fiscal 2023, we expect the Reinforcement Materials EBIT to increase sequentially as volumes are expected to improve, particularly in Asia, as demand strengthens after the impact from the COVID-19 outbreak.

展望 2023 財年第三季度，我們預計增強材料的息稅前利潤將連續增長，因為銷量預計將增加，尤其是在亞洲，因為在 COVID-19 爆發的影響後需求增強。

Year-over-year volumes in the third quarter are expected to be slightly down as compared to the prior year, aligned with external market expectations. We also anticipate margins to be maintained as pricing in our calendar year agreements are set for the rest of the year.

預計第三季度的同比銷量與去年同期相比略有下降，與外部市場預期一致。我們還預計利潤率將保持不變，因為我們的日曆年協議中的定價是為今年剩餘時間設定的。

On a fiscal year basis, we continue to expect strong double-digit EBIT growth as compared to last year, largely due to the improved unit margins from higher pricing and product mix in our 2022 calendar year customer agreements.

從財政年度來看，我們繼續預計與去年相比，息稅前利潤將實現兩位數的強勁增長，這主要是由於我們 2022 日曆年客戶協議中更高的定價和產品組合帶來的單位利潤率提高。

Now turning to Performance Chemicals. EBIT decreased by $42 million in the second fiscal quarter as compared to the same period in fiscal 2022. The decrease was principally driven by our fuel metal oxides product line, where we experienced a 22% volume decline year-over-year and lower unit margins. Lower volumes were driven by weaker demand in silicones applications and the impact from the COVID outbreaks in China.

現在轉向高性能化學品。與 2022 財年同期相比，第二財季的息稅前利潤減少了 4200 萬美元。減少的主要原因是我們的燃料金屬氧化物產品線，我們的銷量同比下降 22%，單位利潤率較低.有機矽應用需求疲軟以及中國 COVID 爆發的影響導致銷量下降。

Lower margins were driven by the comparison to the prior year, where we experienced temporary margin expansion from pricing ahead of raw materials last year.

與上一年相比，利潤率較低，去年我們經歷了原材料提前定價的臨時利潤率擴張。

In addition, the segment also experienced lower volumes in our specialty carbons product line as well as the negative impact from unabsorbed costs as we reduced inventory levels and unfavorable foreign exchange impacts.

此外，該部門還經歷了我們特種碳產品線的銷量下降以及由於我們降低庫存水平和不利的外匯影響而未吸收成本的負面影響。

In summary, year-over-year, the decline was driven by $18 million of lower volumes, $15 million of lower unit margins, $4 million from the impact of reducing inventory levels and $4 million of unfavorable foreign currency impacts.

總之，與去年同期相比，下降的原因是 1800 萬美元的銷量下降、1500 萬美元的單位利潤率下降、400 萬美元的庫存水平下降和 400 萬美元的不利外匯影響。

Looking ahead to the third quarter of fiscal 2023, we expect EBIT to be up sequentially due to higher volumes across all of our product lines as demand in our key end markets improved and margins remain relatively stable.

展望 2023 財年第三季度，我們預計 EBIT 將環比上升，因為我們所有產品線的銷量都將增加，因為我們主要終端市場的需求有所改善且利潤率保持相對穩定。

We have seen improvement in segment volumes month-to-month as we move through the second quarter. We have also reduced costs across the segment given the weaker demand environment, which we expect will help improve EBIT levels in the second half of the year.

隨著我們進入第二季度，我們已經看到細分市場銷量逐月改善。鑑於需求環境疲軟，我們還降低了整個部門的成本，我們預計這將有助於提高下半年的息稅前利潤水平。

I will now turn the call back over to Sean.

我現在將把電話轉回給肖恩。

Thanks, Erica. Moving to the 2023 outlook . I feel very good about the continued progress we are making as a company despite the short-term macroeconomic headwinds. At a strategic level, the key drivers of earnings growth remain unchanged. The impact from our calendar year 2023 reinforcement materials customer agreements is driving the record second quarter EBIT in this segment and the replacement nature of the tire market provides a certain resilience in this business.

謝謝，艾麗卡。轉向 2023 年展望。儘管存在短期宏觀經濟逆風，但我對我們作為一家公司所取得的持續進步感到非常滿意。在戰略層面，盈利增長的主要驅動力保持不變。我們 2023 日曆年的增強材料客戶協議的影響正在推動該領域創紀錄的第二季度息稅前利潤，輪胎市場的替代性質為該業務提供了一定的彈性。

We expect volumes to pick up in the second half of the year with regional supply-demand dynamics expected to remain tight, all of which drives our expectation for another year of strong double-digit EBIT growth in the Reinforcement Materials segment.

我們預計今年下半年銷量將回升，區域供需動態預計將保持緊張，所有這些都推動了我們對增強材料領域 EBIT 又一年強勁兩位數增長的預期。

And while Performance Chemicals has been impacted by the weak external demand environment in the first half of our fiscal year, we expect volumes in all product lines to pick up in the second half of the year. We also expect our growth vectors to be strong contributors to the segment recovery in the second half of the year as sequential volumes improve in battery materials and inkjet volumes accelerate driven by penetration in our targeted growth applications.

儘管高性能化學品在本財年上半年受到疲軟的外部需求環境的影響，但我們預計所有產品線的銷量將在下半年回升。我們還預計我們的增長載體將成為下半年細分市場復甦的有力貢獻者，因為電池材料的連續銷量增加，而噴墨銷量在我們目標增長應用的滲透率的推動下加速。

However, given the slower-than-expected recovery across our Performance Chemicals end markets, particularly in China and a temporary slowdown of sequential momentum in battery materials, we're adjusting our full year guidance to be in the range of $6.10 to $6.50. The midpoint of our guidance would imply modest growth of adjusted earnings per share for the fiscal year which for us, given our fiscal year includes a very weak December destocking quarter.

然而，鑑於我們的高性能化學品終端市場（尤其是中國）的複蘇速度慢於預期，以及電池材料的連續增長勢頭暫時放緩，我們將全年指導調整至 6.10 美元至 6.50 美元的範圍內。我們的指引中點意味著本財年調整後每股收益的適度增長，對我們來說，鑑於我們的財年包括一個非常疲軟的 12 月去庫存季度。

As we think about the quarterly shape of earnings for the full fiscal year, we expect a significant step-up in the second half relative to the first half, providing strong momentum heading into fiscal year 2024.

當我們考慮整個財年的季度盈利形態時，我們預計下半年將較上半年有顯著增長，為進入 2024 財年提供強勁勢頭。

As the earnings increase in the second half of our fiscal year and based on the anticipated working capital release, we expect operating cash flow and free cash flow to be very strong.

隨著本財年下半年收益的增加以及基於預期的營運資金釋放，我們預計運營現金流和自由現金流將非常強勁。

In closing, we are confident in our strategic position and believe that [CapEd] offers a unique growth opportunity. Reinforcement Materials is a structurally improved business with strong earnings and cash flow generation.

最後，我們對我們的戰略地位充滿信心，並相信 [CapEd] 提供了獨特的增長機會。增強材料是一項結構改進的業務，具有強勁的收益和現金流產生能力。

Performance Chemicals is comprised of industry-leading positions with exposure to long-term macro tailwinds. Battery Materials offers the potential for breakout growth, and we have the conviction and the balance sheet to invest behind this transformational shift in mobility.

Performance Chemicals 由行業領先的職位組成，並受到長期宏觀順風的影響。電池材料提供了突破性增長的潛力，我們有信心和資產負債表來投資支持這一移動性轉型。

Our portfolio has strong cash flow characteristics, which can fund our advantaged growth investments and return cash to shareholders. And finally, we are a recognized leader in sustainability, and this strength underpins our purpose and are creating for tomorrow's strategy. With these value drivers firmly in place, we remain on track to achieve the targets outlined in our December 2021 Investor Day.

我們的投資組合具有強大的現金流特徵，可以為我們的優勢增長投資提供資金，並將現金返還給股東。最後，我們是可持續發展領域公認的領導者，這種優勢鞏固了我們的目標，並正在為明天的戰略創造條件。有了這些價值驅動因素的堅定支持，我們將繼續按計劃實現我們在 2021 年 12 月投資者日制定的目標。

Thank you very much for joining us today. And I'll now turn the call over for our Q&A session.

非常感謝您今天加入我們。現在我將把電話轉給我們的問答環節。

(Operator Instructions) Our first question comes from the line of John Roberts of Credit Suisse.

（操作員說明）我們的第一個問題來自瑞士信貸的約翰羅伯茨。

John. Thank you. In reinforcement, I assume you've got more price in the U.S. than elsewhere. Could you at least give us a qualitative discussion of the regional price trends?

約翰。謝謝。作為強化，我假設您在美國的價格高於其他地方。你能不能至少給我們一個關於區域價格趨勢的定性討論？

Sure, John. I would say the pricing trends across the Western market, the Western regions were pretty consistent actually. And that lines up with the pretty consistent structural dynamics in the regions in terms of supply/demand, growth in tire production, the importance of regionalization of the supply chain, all those factors. So I would say they're actually quite consistent across the Western markets.

當然，約翰。我會說整個西部市場的定價趨勢，西部地區實際上是非常一致的。這與該地區在供需、輪胎生產增長、供應鏈區域化的重要性以及所有這些因素方面相當一致的結構動態相吻合。所以我想說它們在整個西方市場實際上非常一致。

And then within the Performance segment, could you talk about masterbatche versus [few metal oxides] in within fuel metal oxides, I didn't hear any discussion about the semiconductor market weakness.

然後在性能部分，你能談談母料與燃料金屬氧化物中的[少量金屬氧化物]嗎，我沒有聽到任何關於半導體市場疲軟的討論。

Yes. So let me touch on the few metal oxides first because that's certainly the single biggest driver of the weakness in Performance Chemicals. Now this - the fuel metal oxides market serves principally applications in the silicone space. This is by far the largest volume space in the market, and silicones were down very, very sharply in this quarter.

是的。所以讓我先談談少數金屬氧化物，因為這肯定是 Performance Chemicals 疲軟的最大單一驅動因素。現在，燃料金屬氧化物市場主要服務於有機矽領域的應用。這是迄今為止市場上最大的成交量空間，本季度有機矽的跌幅非常非常大。

There are several public company comps in the silicone space. And you can see that their results were down sharply. So I think our dynamic is similar to the overall market. And as Erica said, volumes were down 22% year-over-year in this product line.

有機矽領域有幾家上市公司。你可以看到他們的結果急劇下降。所以我認為我們的動態與整體市場相似。正如 Erica 所說，該產品線的銷量同比下降了 22%。

And as you might recall from the past or Investor Day, this product line is the highest margin business in the segment. So when you combine that with the high operating leverage in the business, it's pretty significant.

您可能還記得過去或投資者日，該產品線是該細分市場中利潤率最高的業務。因此，當您將其與業務中的高運營槓桿相結合時，它非常重要。

Now there are also silica sales silica sales into the semiconductor space. Those have diminished over time as next-generation nodes have moved to other forms of abrasive particle, either colloidal silica or Syria. So products that we don't participate in.

現在也有二氧化矽銷售 二氧化矽銷售進入半導體領域。隨著下一代節點轉向其他形式的磨料顆粒（膠體二氧化矽或敘利亞），這些隨著時間的推移而減少。所以我們不參與的產品。

That being said, we do still have a meaningful legacy tail of silica into the CMP or semiconductor space. And that too was declining. But the largest driver here, John, was the contraction or the lower demand in the overall silicones space.

話雖這麼說，我們仍然在 CMP 或半導體領域擁有有意義的二氧化矽遺留尾巴。這也在下降。但約翰，這裡最大的驅動因素是整個有機矽領域的收縮或需求下降。

(Operator Instructions) Our next comes from the line of Josh Spector, UBS

（操作員說明）我們的下一個來自 UBS 的 Josh Spector 系列

In your slides, you have a comment on performance chems that margins are expected to remain stable from 2Q, '23 levels. I wanted to really understand that more. I mean, your margins were about 9% in the quarter. You talked about cost savings, you cost about improvement. Do you mean that they're going to be stable at that level? Or are they going to improve from those levels?

在您的幻燈片中，您對性能化學品發表了評論，預計利潤率將從 2023 年第二季度的水平保持穩定。我想真正了解更多。我的意思是，你們本季度的利潤率約為 9%。你談到了成本節約，你的成本是關於改進的。你的意思是他們會穩定在那個水平嗎？或者他們會從這些水平上提高嗎？

What we mean, Josh, is that the unit margin, so price minus variable cost will remain stable. Obviously, the EBITDA margins will improve over the quarter as we get higher volumes and more coverage of the cost base and then some of the cost actions that we're talking about flow through. So when we say margins, we're talking about that sort of price minus raw spread, that's what we mean.

Josh，我們的意思是單位利潤率，因此價格減去可變成本將保持穩定。顯然，EBITDA 利潤率將在本季度有所改善，因為我們獲得了更高的銷量和更多的成本基礎覆蓋範圍，然後我們正在討論的一些成本行動得以實現。所以當我們說利潤時，我們指的是那種價格減去原始價差，這就是我們的意思。

Okay. Got it. Makes sense. And just on your battery materials business, when you talk about the new win where you announced in 9 of the 10 largest producers. I was wondering if you can give some context around there. Are any of those exclusive? Are you supplying the majority of the conductive carbons into those formulations? Or are you more qualified for that platform? So how much of that materializes into sales, specifically for Cabot versus giving you the optionality to do so?

好的。知道了。說得通。就您的電池材料業務而言，當您談論您在 10 家最大生產商中的 9 家宣布的新勝利時。我想知道你是否可以提供一些背景信息。這些是獨家的嗎？您是否在這些配方中提供了大部分導電碳？還是你更適合那個平台？那麼，其中有多少具體化為銷售，特別是對於 Cabot 而言，還是讓您可以選擇這樣做？

Yes. So the way it typically works in battery materials is you get qualified into a battery program or a battery platform. And then as that platform grows and proliferates, then you grow with it. So that's typically how it works. So for example, legacy platforms that Cabot may not have been in, typically, those don't get switched out. It has much more to do with winning new programs. So as the program ramps, then we would expect our sales volumes to ramp up with that.

是的。因此，它通常在電池材料中起作用的方式是您獲得電池項目或電池平台的資格。然後隨著該平台的成長和擴散，你也會隨之成長。所以這通常是它的工作原理。因此，例如，卡博特可能沒有使用過的遺留平台，通常不會被淘汰。它與贏得新項目有更多關係。因此，隨著該計劃的推進，我們預計我們的銷量也會隨之增加。

Now typically, because these are going into automotive applications, there's usually a primary and a secondary supplier to a program because the auto OEs require that sort of supply redundancy. But it's really program-driven, Josh. And so as the program ramps, assuming the success that the customer intends then we would see the flow-through of that.

現在通常情況下，因為這些都進入了汽車應用，所以通常會有一個主要供應商和一個次要供應商，因為汽車 OE 需要這種供應冗餘。但它確實是程序驅動的，Josh。因此，隨著項目的推進，假設客戶想要成功，我們就會看到它的流動。

Our next question comes from the line of Jeff Zekauskas of JPMorgan.

我們的下一個問題來自摩根大通的 Jeff Zekauskas。

This is Lilia on for Jeff. It seems like contract really high. I think like contract negotiation for Rubber Black has started early this year. What are you seeing across different regions...

這是傑夫的莉莉婭。看起來合同真的很高。我認為 Rubber Black 的合同談判已於今年年初開始。你在不同地區看到了什麼......

Sorry, Lily, could you just say that again? I said something about contracts and regions, sorry.

對不起，莉莉，你能再說一遍嗎？對不起，我說了一些關於合同和地區的事情。

Yes. It's just -- we've heard that the contract renegotiation for Rubber Black has started early this year. So just wondering what are you seeing for pricing across different regions?

是的。只是——我們聽說 Rubber Black 的合同重新談判已於今年年初開始。所以只是想知道您對不同地區的定價有何看法？

Yes. So it is early in the process. So normally, the contract discussions begin over the course of the summer and then progress into the fall period. And so certain customers have approached us to start negotiations for 2024. I think there are a lot of moving parts.

是的。所以它處於這個過程的早期。所以通常情況下，合同討論從夏季開始，然後進入秋季。因此，某些客戶已與我們接洽，開始就 2024 年進行談判。我認為其中有很多變動因素。

However, I think what happens is the Russia sanction date nears in 2024 and how did China feedstock economics as potential replacement for the Russian material, for example, in Europe, these are important dynamics to watch -- so I would say it's early in the process here.

然而，我認為俄羅斯的製裁日期臨近 2024 年，以及中國原料經濟如何作為俄羅斯材料的潛在替代品，例如在歐洲，這些都是值得關注的重要動態——所以我想說現在還處於早期階段。在這里處理。

I would remind you that we did close some negotiations in 2023 that were multiyear agreements with incremental pricing in 2024. So I think this does give us some momentum heading into '24 and it does set a market reference. But I would say, while certain conversations have begun, it's early in the process. That said, I would say the structural supply-demand dynamics in the Western markets remain unchanged and favorable, and so we expect that to continue.

我想提醒你，我們確實在 2023 年結束了一些談判，這些談判是多年協議，在 2024 年進行了增量定價。所以我認為這確實給了我們一些進入 24 年的動力，它確實設定了市場參考。但我要說的是，雖然某些對話已經開始，但還處於早期階段。也就是說，我想說西方市場的結構性供需動態保持不變且有利，因此我們預計這種情況將持續下去。

Yes. And your cash flow from operations this quarter is higher than for your full year last year. So can you talk about the changes here? And maybe talk more about your expectation for the rest of the year?

是的。本季度您的運營現金流高於去年全年。那麼你能談談這裡的變化嗎？也許更多地談談你對今年餘下時間的期望？

Sure. So operating cash flow was strong this quarter. As the EBITDA improved from earlier in the year, that's part of it. And then I would say it's really working capital. And so last year, we had increasing raw material costs that caused increasing levels of investment into the working capital. We see that those raw material costs are coming down this year. And so you see a positive contribution or source of cash from working capital in the second quarter. We expect that to continue as we move through the year.

當然。因此，本季度的經營現金流強勁。由於 EBITDA 比今年早些時候有所改善，這是其中的一部分。然後我會說這真的是營運資金。因此，去年，我們的原材料成本不斷增加，導致對營運資金的投資水平不斷提高。我們看到這些原材料成本今年正在下降。因此，您會在第二季度看到營運資金的積極貢獻或現金來源。我們預計這一年將繼續下去。

o that goes to the comments I made, where we would think another in excess of $50 million would be released out of working capital in the back half of the year. And so expect continued very strong cash flow from operations as we go through the rest of 2023.

o 這就是我發表的評論，我們認為下半年將從營運資金中釋放另外超過 5000 萬美元。因此，預計在 2023 年剩餘時間裡，運營現金流將持續非常強勁。

Our next question comes from the line of Laurence Alexander of Jefferies are.

我們的下一個問題來自 Jefferies 的 Laurence Alexander。

It's Dan Mason for Laurence. You mentioned the circular tires, the new product. I was just wondering how we should think about the growth within that product? Is it going to be something, I assume not, but is the gross growth trajectory as battery materials? Could there be something of that magnitude? Or will it be maybe a longer time line?

勞倫斯是丹·梅森。你提到了圓形輪胎，新產品。我只是想知道我們應該如何考慮該產品的增長？它會是什麼，我想不會，但作為電池材料的總增長軌跡是什麼？會有那麼大的東西嗎？或者它可能會是一個更長的時間線？

Yes. You're referring to the Evolve Sustainable Solutions product technology launch had Dan.

是的。你指的是 Dan 推出的 Evolve Sustainable Solutions 產品技術。

Yes, that's correct.

對，那是正確的。

Yes. Yes. Yes. The technology platform that we launched, our goal here is to develop products that offer sustainable content with reliable performance. And I think most importantly, at industrial scale. And I think we're in a great position to do that. And so we'll be leveraging the circular value chains and materials that have recovered from end-of-life tires as well as any renewable or bio-based material options, feedstock options and processes that can reduce the greenhouse gas emissions.

是的。是的。是的。我們推出的技術平台，我們的目標是開發提供可持續內容和可靠性能的產品。我認為最重要的是，在工業規模上。我認為我們有能力做到這一點。因此，我們將利用循環價值鍊和從報廢輪胎中回收的材料，以及任何可減少溫室氣體排放的可再生或生物基材料選擇、原料選擇和工藝。

So these are the levers that we're pulling under the Evolve platform. And so if you think about over time how this should develop, we anticipate driving revenue starting in this year. and we expect to see a material impact from the Evolve sustainable solutions over a 5- to 10-year period is how you ought to think about it.

所以這些是我們在 Evolve 平台下拉動的槓桿。因此，如果你考慮隨著時間的推移應該如何發展，我們預計從今年開始增加收入。我們希望看到 Evolve 可持續解決方案在 5 到 10 年內產生實質性影響，這就是您應該如何思考它。

This is driven by the speed of adoption of new technologies in the rubber industry as well as how our tire customers greenhouse gas goals set up between here and 2050 carbon neutrality, which they all have goals for that. But how they're -- how exactly their interim goals in 2030 and between 2030 and 2050, how those line out will drive things, too.

這是由橡膠行業採用新技術的速度以及我們的輪胎客戶如何設定從現在到 2050 年碳中和之間的溫室氣體目標推動的，他們都有目標。但他們如何 - 他們在 2030 年以及 2030 年至 2050 年之間的中期目標究竟如何，這些目標將如何推動事情發生。

But I would think about this as a longer-term play that's really getting at the sustainability needs of our customers and frankly, societies pressures around sustainability. So we're excited about it because we think we bring an ability to commercialize -- develop and commercialize these technologies and do it at scale, which there are start-ups and the like that play in this space but can't really bring things to market at scale the way we can. So that's how I would think about it, Dan.

但我認為這是一項真正滿足客戶可持續發展需求的長期行動，坦率地說，社會對可持續發展施加壓力。所以我們對此感到興奮，因為我們認為我們帶來了商業化的能力——開發和商業化這些技術並大規模地進行，有初創企業等在這個領域發揮作用但不能真正帶來東西盡我們所能大規模營銷。這就是我的想法，丹。

All right. And then you mentioned or it was mentioned that there was an improvement in working capital because of the drop in oil prices. I was wondering if there's a rule of thumb with oil and its relation to working capital, such as a $10 million movement in oil translates into an x movement in working capital or how we should think about that?

好的。然後你提到或有人提到，由於油價下跌，營運資金有所改善。我想知道石油及其與營運資金的關係是否有經驗法則，例如石油 1000 萬美元的變動轉化為營運資金的 x 變動，或者我們應該如何考慮？

Sure, Dan. So I can answer that. The general rule of thumb is about a $1 change in oil is about $5 million in working capital. And so it does usually happen over really 2 quarters usually as you'll see the inventory repriced quickly and then the accounts receivable might move into the following quarter, but that's the rule of them.

當然，丹。所以我可以回答。一般的經驗法則是，石油價格每變化 1 美元，營運資金約為 500 萬美元。因此，它通常確實會在 2 個季度內發生，因為您會看到庫存迅速重新定價，然後應收賬款可能會轉移到下一個季度，但這是他們的規則。

Thank you. Our next question comes from the line of Chris Kapsch of Loop Capital.

謝謝。我們的下一個問題來自 Loop Capital 的 Chris Kapsch。

So if I think about the if I think about the guidance, the modest guidance reduction, it sounds like it's predominantly attributable to trends in the Performance Chemicals segment. And I think you mentioned fee silicones into the silicon industry is the biggest. I don't know if you can rank order the other contributors is specialty, maybe specialty carbons, maybe there's a residual destock there. I don't know if that's second, but then the slower momentum at least temporarily in vary materials.

因此，如果我考慮一下指導，適度的指導減少，聽起來這主要歸因於高性能化學品領域的趨勢。而且我認為您提到費有機矽進入矽行業是最大的。我不知道你是否可以將其他貢獻者的順序排列為專業，也許是專業碳，也許那裡有剩餘的去庫存。我不知道那是不是第二個，但至少暫時在不同材料中的動量較慢。

You also mentioned though, I'm curious if that's the kind of the right way to think in terms of order of magnitude, but also just you mentioned improving demand trends for this segment on a monthly basis. Just wondering if you could characterize if that's that characteristic of each of those different businesses and how it's persisted, how those trends have persisted thus far into the third quarter through April.

你也提到過，我很好奇這是否是按數量級思考的正確方法，但你也提到了每月改善這一細分市場的需求趨勢。只是想知道你是否可以描述這是否是每個不同業務的特徵，以及它是如何持續存在的，這些趨勢是如何持續到第三季度到四月份的。

Maybe on the first question, Erika, will take that, and then I'll come back on the second one, Chris.

也許關於第一個問題，Erika，會回答這個問題，然後我會回來回答第二個問題，Chris。

Yes. Chris, I think if you think of the impacts in the quarter, fumetaloxide is, by far, the largest and majority of the decline. Next, I would say it would be our Specialty Carbons business. Volumes are down about 5% in that business, which drove a reduction in most of the inventory or unabsorbed costs because of the inventory reductions is also in carbo0n.

是的。克里斯，我想如果你考慮一下本季度的影響，到目前為止，fumetaloxide 是跌幅最大的，也是跌幅最大的。接下來，我會說這將是我們的特種碳業務。該業務的銷量下降了約 5%，這推動了大部分庫存或未吸收成本的減少，因為庫存減少也體現在碳中。

So that would probably be secondary. And then as Sean talked about battery materials, the temporary decline here in EV sales in Q2 was also impactful. So I would probably say in though that order. As we think about the volume recovery, I'd say through Q2 pretty broad-based in terms of month-to-month improvement as we move through the quarter.

所以這可能是次要的。然後當肖恩談到電池材料時，第二季度電動汽車銷量的暫時下降也產生了影響。所以我可能會按照這個順序說。當我們考慮銷量復甦時，我想說的是，隨著我們整個季度的推進，第二季度的月度改善情況非常廣泛。

I would say battery materials also improved in April. So from the exit in Q2 into April volumes in battery materials have improved. So I think that's good. In some of the other businesses, I'd say April was a bit weaker than March, but I would characterize it as stronger than kind of the January, February run rate. So that's what we've seen in April. And then I said the order book for May looks pretty strong across the businesses. And so that's what our outlook takes into consideration.

我想說電池材料在 4 月份也有所改善。因此，從第二季度退出到 4 月份，電池材料的銷量有所改善。所以我認為這很好。在其他一些業務中，我會說 4 月份比 3 月份略弱，但我認為它比 1 月份和 2 月份的運行率強。這就是我們在四月份看到的情況。然後我說 5 月份的訂單在所有業務中看起來都非常強勁。這就是我們的前景考慮的因素。

And maybe, Chris, just a couple of additional comments there. So again, the midpoint of the range is -- would be roughly flat to fiscal '22, but that was a record and up 25% over fiscal '21. And so a couple of things here. One is that would be a result after offsetting about $0.50 EPS headwind from interest and unfavorable FX and then also important to remember that given our fiscal year-end of September 30, we're pulling in that very weak December quarter. So when you look at second half momentum, I think that's an important picture to look at there. I think the monthly trends, Eric had touched on well. I don't have anything more to add on that one.

克里斯，也許還有一些額外的評論。因此，該範圍的中點再次是——與 22 財年大致持平，但這是創紀錄的，比 21 財年增長了 25%。所以這裡有幾件事。一個是在抵消了利息和不利外匯帶來的約 0.50 美元每股收益逆風之後的結果，然後同樣重要的是要記住，鑑於我們的財年截止日期為 9 月 30 日，我們將進入非常疲軟的 12 月季度。所以當你看下半場的勢頭時，我認為這是一個重要的畫面。我認為 Eric 談到的月度趨勢很好。我沒有什麼可以補充的了。

Got it. And then my follow-up is focused on the battery materials space. And a key theme here has been more broadly has been just the security of supply concerns for really a variety of battery materials. And to the extent that you're having tremendous success 9 out of the top 10 lithium-ion battery producers globally and partnering with them, supplying them. Just curious how that theme plays into your relationships with those customers. And obviously, you're supplying those now, but are they -- do they have expectations for you to partner with them globally. How is that playing out? Or do you have visibility to what their demand requirements are going to be in different regions? And is that starting to play into your growth capital plans?

知道了。然後我的後續工作集中在電池材料領域。更廣泛地說，這裡的一個關鍵主題只是各種電池材料的供應安全問題。就全球前 10 大鋰離子電池生產商中的 9 家而言，您取得了巨大的成功，並與他們合作，為他們提供產品。只是好奇這個主題如何影響您與這些客戶的關係。顯然，您現在正在提供這些，但他們是否期望您在全球範圍內與他們合作。結果如何？或者您是否了解他們在不同地區的需求要求？這是否開始影響您的增長資本計劃？

Yes, sure. Well, certainly, I think a couple of things are going on in the battery market. It's been principally a China market up until now, as you know well, I think some 75-ish percent of batteries, I think, are made in China. So outside of China is relatively small, but there are significant battery investments that are being constructed as we speak and coming online over the next 2, 3 years and out in through the end of the decade. And so I think a couple of things are going to happen, Chris. First of all, you're seeing a lot of non Chinese battery players building outside of China. And I think you'll probably see some sort of a bifurcation between battery market for China and then rest of world. And so certainly, the customers that we're working with in Europe and the U.S. really value regional supply. And so I think the ability to provide that to them is very important. Now typically, what happens here is that you get qualified in a program with a given battery maker. And then as that particular program or platform proliferates, then you grow with that. So as you get qualified and begin to win, there's a ramp schedule. -- sometimes hard to predict. That's why I think there can be some unevenness in the way this market develops. But that's how you want to think about it. And I think Cabot's global scale, our footprint, our ability to build out capacity regionally for these customers as this market bifurcates, -- and I think that's, I think, an advantage for Cabot. And so we're investing behind that and are building out capacity to meet that...

是的，當然。嗯，當然，我認為電池市場正在發生一些事情。到目前為止，它主要是中國市場，正如你所知，我認為大約 75% 的電池是在中國製造的。因此，中國以外的地區相對較小，但在我們說話時，正在建設大量電池投資，並在未來 2 年、3 年內投入使用，並一直持續到本世紀末。因此，克里斯，我認為會發生一些事情。首先，你會看到很多非中國電池廠商在中國境外建設。而且我認為您可能會看到中國電池市場與世界其他地區之間存在某種分歧。當然，我們在歐洲和美國與之合作的客戶非常重視區域供應。所以我認為向他們提供這些的能力非常重要。現在通常情況下，這裡發生的是您在給定電池製造商的計劃中獲得資格。然後隨著該特定程序或平台的激增，您將隨之成長。因此，當您獲得資格並開始獲勝時，就會有一個斜坡時間表。 -- 有時很難預測。這就是為什麼我認為這個市場的發展方式可能存在一些不平衡。但這就是你想要考慮的方式。我認為 Cabot 的全球規模、我們的足跡、我們在這個市場分叉時為這些客戶建立區域能力的能力，我認為這是 Cabot 的優勢。因此，我們正在為此進行投資，並正在建設滿足這一目標的能力……

Thank you. At this time, I would like to turn the conference back to Sean Keohane for closing remarks. Sir?

謝謝。此時，我想將會議轉回 Sean Keohane 作閉幕詞。先生？

Great. Well, thank you very much for joining today. Thank you for your continued support of Cabot Corporation, and I hope you have a safe day. You will...

偉大的。好吧，非常感謝你今天的加入。感謝您一直以來對卡博特公司的支持，希望您今天過得愉快。你會...

Now this concludes today's conference call. Thank you for participating. You may now disconnect.

現在，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。