BOSTON--(BUSINESS WIRE)--Cabot Corporation (NYSE: CBT) today announced results for its third quarter of fiscal year 2016.

Commenting on the results, Cabot President and CEO Sean Keohane, said, “I am pleased to see the substantial improvement in operating results both on a year-over-year and sequential basis. As we expected, volumes improved sequentially across our segments and we continued to realize the benefit from our cost savings initiatives. Our Performance Chemicals segment continued to deliver exceptional results from strong volumes and margins. The improvement in our Specialty Fluids segment was in part a result of our sustained efforts to expand our business outside the North Sea. The success this quarter validates the value proposition of this unique material, even in a low oil price environment. ” Keohane continued, “In addition, we delivered another strong quarter of cash generation with cash flows from operations in excess of $100 million.”

Financial Detail
For the third quarter of fiscal 2016, net income attributable to Cabot Corporation was $56 million ($0.88 per diluted common share). Net income includes a per share charge of $0.05 from certain items, principally reflecting charges associated with restructuring activities and executive transition costs. Adjusted EPS for the third quarter of fiscal 2016 was $0.93 per share.

Segment Results

Reinforcement Materials -- Third quarter fiscal 2016 EBIT in Reinforcement Materials increased by $3 million compared to the third quarter of fiscal 2015 principally driven by lower fixed costs as a result of cost savings initiatives. Volumes declined by 2% during the third quarter of fiscal 2016 as compared to the third quarter of fiscal 2015 as a result of lower volumes in Asia due to a challenging macro-economic environment and the closure of our Merak, Indonesia manufacturing plant. Sequentially, Reinforcement Materials EBIT increased by $1 million compared to the second quarter of fiscal 2016 driven by higher volumes partially offset by a less favorable price and product mix. Sequentially, volumes increased by 6% due to higher volumes in the Americas from the full impact of calendar year contracts and from seasonally higher volumes in Asia.

Performance Chemicals -- Third quarter fiscal 2016 EBIT in Performance Chemicals increased by $11 million compared to the third quarter of fiscal 2015 due to improved margins from a stronger product mix and lower raw material costs, and higher volumes. Volumes increased by 3% in the Specialty Carbons and Formulations business and 9% in the Metal Oxides business. Sequentially, Performance Chemicals EBIT increased by $1 million compared to the second quarter of fiscal 2016, primarily due to higher volumes, with a 7% increase in Specialty Carbons and Formulations and a 10% increase in Metal Oxides. The higher volumes were partially offset by a less favorable product mix.

Purification Solutions -- Third quarter fiscal 2016 EBIT in Purification Solutions decreased by $3 million compared to the third quarter of fiscal 2015 primarily due to an unfavorable impact from reducing inventory levels as compared to the prior year. This was partially offset by higher volumes driven by MATS-related demand and lower fixed costs. Sequentially, Purification Solutions EBIT increased by $2 million compared to the second quarter of fiscal 2016 driven by higher volumes from MATS-related demand. The increase in volumes was partially offset by an unfavorable impact from reducing inventory levels as compared to the prior quarter and a less favorable price and product mix.

Specialty Fluids – Third quarter fiscal 2016 EBIT in Specialty Fluids increased by $7 million compared to the third quarter of fiscal 2015 and increased by $12 million compared to the second quarter of fiscal 2016. The increase in both comparative periods was due to a higher level of project activity in both the North Sea and Asia.

Cash Performance --The Company ended the third quarter of fiscal 2016 with a cash balance of $222 million. During the third quarter of fiscal 2016, cash flows from operating activities were $107 million, including an increase in net working capital of $21 million. Capital expenditures for the third quarter of fiscal 2016 were $28 million, including $21 million for sustaining and compliance capital expenditures. Additional uses of cash during the third quarter included $19 million for dividends and $8 million for share repurchases.

Taxes -- During the third quarter of fiscal 2016, the Company recorded a tax provision of $15 million for an effective tax rate of 21%. This included a tax benefit from certain items of $2 million. Excluding the impact of certain items on both operating income and the tax provision, the year-to-date operating tax rate on continuing operations for fiscal 2016 was 24%.

Outlook
Commenting on the outlook for the Company, Keohane said, “With the third quarter operating results in line with our expectations, we are on track to deliver results in the low to mid-point of the range we communicated last quarter. Looking sequentially, while the Performance Chemicals and Specialty Fluids segments are expected to moderate, we anticipate a strengthening of results from our Reinforcement Materials and Purification Solutions segments.” Keohane continued, “We are driving our Advancing the Core strategy focused on profit growth and cash generation. In addition, we are maintaining discipline around our capital allocation framework, which includes returning cash to shareholders as demonstrated this quarter with the increase in our dividend and ongoing share repurchases.”

About Cabot Corporation

Cabot Corporation (NYSE: CBT) is a global specialty chemicals and performance materials company, headquartered in Boston, Massachusetts. The company is a leading provider of rubber and specialty carbons, activated carbon, inkjet colorants, cesium formate drilling fluids, fumed silica, and aerogel. For more information on Cabot, please visit the company’s website at: http://www.cabotcorp.com.