Cabot Corp: Form 10-Q for the period ended Mar 31, 2025

Recently Issued Accounting Pronouncements

Refer to the discussion under the heading “Recent Accounting Pronouncements” in Note B of our Notes to the Consolidated Financial Statements.

Results of Operations

The Company has two reportable segments: Reinforcement Materials and Performance Chemicals. Cabot is also organized for operational purposes into three geographic regions: the Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific. The discussion of our results of operations for the periods presented reflects these structures.

Our analysis of our financial condition and operating results should be read with our consolidated financial statements and accompanying notes.

Definition of Terms and Non-GAAP Financial Measures

When discussing our results of operations, we use several terms as described below.

The term “product mix” refers to the mix of types and grades of products sold or the mix of geographic regions where products are sold, and the positive or negative impact this has on the revenue or profitability of the business and/or segment.

Our discussion under the heading “(Provision) Benefit for Income Taxes and Reconciliation of Effective Tax Rate to Operating Tax Rate” includes a discussion and reconciliation of our “effective tax rate” and our “operating tax rate” for the periods presented, as well as management’s projection of our operating tax rate range for the full fiscal year. Our operating tax rate is a non-GAAP financial measure and should not be considered as an alternative to our effective tax rate, the most comparable GAAP financial measure. The operating tax rate is calculated based upon management's forecast of the annual operating tax rate for the fiscal year applied to adjusted pre-tax earnings. The operating tax rate excludes income tax (expense) benefit on certain items, discrete tax items, and, on a quarterly basis, the timing of losses in certain jurisdictions. The income tax (expense) benefit on certain items is determined using the applicable rates in the taxing jurisdictions in which the certain items occurred and includes both current and deferred income tax (expense) benefit based on the nature of the certain items. Discrete tax items include, but are not limited to, changes in valuation allowance, uncertain tax positions, and other tax items, such as the tax impact of legislative changes and tax accruals on historic earnings due to changes in indefinite reinvestment assertions. Our definition of the operating tax rate may not be comparable to the definition used by other companies. Management believes that this non-GAAP financial measure is useful supplemental information because it helps our investors compare our tax rate year to year on a consistent basis and to understand what our tax rate on current operations would be without the impact of these items.

Our discussion under the heading “Second Quarter of Fiscal 2025 versus Second Quarter of Fiscal 2024—By Business Segment” includes a discussion of Total segment EBIT, which is a non-GAAP financial measure defined as Income (loss) from operations before income taxes and equity in earnings from affiliated companies less certain items and other unallocated items. Our Chief Operating Decision Maker, who is our President and Chief Executive Officer, uses segment EBIT to evaluate the operating results of each segment and to allocate resources to the segments. We believe Total segment EBIT, which reflects the sum of EBIT from our reportable segments, provides useful supplemental information for our investors as it is an important indicator of our operational strength and performance, allows investors to see our results through the eyes of management, and provides context for our discussion of individual business segment performance. Total segment EBIT should not be considered an alternative for Income (loss) from operations before income taxes and equity in earnings of affiliated companies, which is the most directly comparable U.S. GAAP financial measure. A reconciliation of Total segment EBIT to Income (loss) from operations before income taxes and equity in earnings of affiliated companies is provided under the heading “Second quarter of Fiscal 2025 versus Second quarter of Fiscal 2024—By Business Segment”. Investors should consider the limitations associated with this non-GAAP measure, including the potential lack of comparability of this measure from one company to another.

In calculating Total segment EBIT, we exclude from our Income (loss) from operations before income taxes and equity in earnings of affiliated companies (i) items of expense and income that management does not consider representative of our fundamental on-going segment results, which we refer to as “certain items”, and (ii) items that, because they are not controlled by the business segments and primarily benefit corporate objectives, are not allocated to our business segments, such as interest expense and other corporate costs, which include unallocated corporate overhead expenses such as certain corporate salaries and headquarter expenses, plus costs related to special projects and initiatives, which we refer to as “other unallocated items”. Management believes excluding the items identified as certain items facilitates operating performance comparisons from period to period by eliminating differences that would not otherwise be apparent on a GAAP basis and also facilitates an evaluation of our operating performance without the impact of these costs or benefits. The items of income and expense that we have excluded from

Total segment EBIT, as applicable, but that are included in our GAAP Income (loss) from operations before income taxes and equity in earnings of affiliated companies, as applicable, are described below.

• Argentina controlled currency devaluation loss related to the foreign exchange loss from government-controlled currency devaluations on our net monetary assets denominated in the Argentine peso and investment losses related to the utilization of government bond programs established for the settlement of certain foreign payables.
• Global restructuring activities, which include costs or benefits associated with cost reduction initiatives or plant closures and are primarily related to (i) employee termination costs, (ii) asset impairment charges associated with restructuring actions, (iii) costs to close facilities, including environmental costs and contract termination penalties, and (iv) gains realized on the sale of land or equipment associated with restructured plants or locations.
• Legal and environmental matters and reserves, which consist of costs or benefits for matters typically related to former businesses or that are otherwise incurred outside of the ordinary course of business.
• Acquisition and integration-related charges, which include transaction costs, redundant costs incurred during the period of integration, and costs associated with transitioning certain management and business processes to Cabot’s processes.
• Asset impairment charges, which primarily include charges associated with an impairment of goodwill, other long-lived assets or assets held for sale.
• Gains (losses) on sale of a business.
• Employee benefit plan settlements, which consist of either charges or benefits associated with the termination of a pension plan or the transfer of a pension plan to a multi-employer plan.

Overview

During the second quarter of fiscal 2025, Income (loss) before income taxes and equity in earnings of affiliated companies increased as compared to the second quarter of fiscal 2024. The increase was primarily due to lower Argentina controlled currency devaluation and other losses and higher Segment EBIT in Performance Chemicals.

Second quarter of Fiscal 2025 versus Second quarter of Fiscal 2024—Consolidated

Net Sales and Other Operating Revenues and Gross Profit

(In millions)

For the three and six months ended March 31, 2025, Net sales and other operating revenue decreased by $83 million and $86 million, respectively, compared to the same periods of fiscal 2024.

The decrease in Net sales and other operating revenues in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 was driven by lower volumes in Reinforcement Materials ($48 million), less favorable pricing and product mix in both Reinforcement Materials and Performance Chemicals ($24 million combined), and the unfavorable impact from foreign currency translations in both Reinforcement Materials and Performance Chemicals ($28 million combined), all of which were partially offset by higher volumes in Performance Chemicals ($16 million). The lower volumes in Reinforcement Materials were primarily due to lower tire demand. The less favorable pricing and product mix in both Reinforcement Materials and Performance Chemicals was driven by lower raw material costs which, in certain instances, are passed through to our customers through formulas and other market-based adjustments. The higher volumes in Performance Chemicals were primarily in our Fumed Metal Oxides product line as volumes related to construction and semiconductor applications reconnected to underlying demand drivers in key end markets.

The decrease in Net sales and other operating revenues in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 was driven by less favorable pricing and product mix in both Reinforcement Materials and Performance Chemicals ($64 million combined), lower volumes in Reinforcement Materials ($44 million), the unfavorable impact from foreign currency translations in both Reinforcement Materials and Performance Chemicals ($27 million combined), partially offset by higher volumes in Performance Chemicals ($50 million). The less favorable pricing and product mix was driven by lower raw material costs which, in certain instances, are passed through to our customers through formulas and other market-based adjustments. The lower volumes in Reinforcement Materials were primarily due to lower tire demand. The higher volumes in Performance Chemicals were across all product lines as volumes have reconnected to underlying demand drivers in key end markets.

For the three and six months ended March 31, 2025, gross profit decreased by $5 million and increased by $12 million, respectively, compared to the same periods of fiscal 2024.

The decrease in Gross profit in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 was driven primarily by lower volumes in Reinforcement Materials ($20 million) which were partially offset by higher volumes in Performance Chemicals ($9 million) and higher gross profit per ton in Performance Chemicals ($9 million). The lower volumes in Reinforcement Materials were primarily due to lower tire demand. The higher volumes in Performance Chemicals were primarily in our Fumed Metal Oxides product line as volumes related to construction and semiconductor applications reconnected to underlying demand drivers in key end markets. The higher gross profit per ton in our Performance Chemicals segment was primarily from targeted price increases, cost savings and optimization measures across the segment.

The increase in Gross profit in the first six months of fiscal 2025 as compared to the same period in the prior year was primarily driven by higher volumes in Performance Chemicals ($29 million) which were partially offset by lower volumes in Reinforcement Materials ($18 million). The higher volumes in Performance Chemicals were driven by higher volumes across all product lines as volumes have reconnected to underlying demand drivers in key end markets. The lower volumes in Reinforcement Materials were primarily due to lower tire demand.

Selling and Administrative Expenses

(In millions)

Selling and administrative expenses decreased by $11 million and $12 million for the three and six months ended March 31, 2025, respectively, compared to the same periods of fiscal 2024 primarily from overall cost management efforts and expenses related to our board of directors.

Research and Technical Expenses

(In millions)

Research and technical expenses remained flat in the second quarter of fiscal 2025 and decreased by $1 million for the six months ended March 31, 2025, respectively, compared to the same periods of fiscal 2024.

Interest and Dividend Income, Interest Expense and Other Income (Expense)

(In millions)

Interest and dividend income decreased by $1 million and $4 million in the three and six months ended March 31, 2025, respectively, compared to the same periods of fiscal 2024, primarily due to lower average interest rates, partially offset by higher average cash balances.

Interest expense decreased by $2 million and $6 million in the three and six months ended March 31, 2025, respectively, compared to the same periods of fiscal 2024, due to lower average interest rates on short term borrowings.

Other income (expense) increased by $2 million in the second quarter of fiscal 2025 compared to the same period of fiscal 2024, primarily due to lower foreign exchange losses primarily in Argentina. Other income (expense) increased by $32 million for the six months ended March 31, 2025, as compared to the same period of fiscal 2024, primarily due to lower foreign exchange losses primarily in Argentina.

(Provision) Benefit for Income Taxes and Reconciliation of Effective Tax Rate to Operating Tax Rate

Dollars in millions

(1) Non-GAAP tax adjustments made to arrive at the operating tax provision include the income tax (expense) benefit on certain items, discrete tax items, and, on a quarterly basis, the timing of losses in certain jurisdictions, as further described above under the heading “Definition of Terms and Non-GAAP Financial Measures”.

For the three months ended March 31, 2025, the (Provision) benefit for income taxes was a provision of $49 million compared to a provision of $47 million for the same period in fiscal 2024, with the change primarily due to higher earnings in the current period. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate, and by the presence of valuation allowances in certain tax jurisdictions.

For the six months ended March 31, 2025, the (Provision) benefit for income taxes was a provision of $90 million compared to a $81 million provision for the same period in fiscal 2024, primarily due to higher earnings in the current period.

For fiscal 2025, we expect the Operating tax rate to be in the range of 27% to 29%. We are not providing a forward-looking reconciliation of the operating tax rate range with an effective tax rate range because, without unreasonable effort, we are unable to predict with reasonable certainty the matters we would allocate to “certain items,” including unusual gains and losses, costs associated with future restructurings, acquisition-related expenses and litigation outcomes. These items are uncertain, depend on various factors, and could have a material impact on the effective tax rate in future periods.

Net Income (Loss) Attributable to Noncontrolling Interests

(In millions)

Equity in earnings of affiliated companies, net of tax, increased by $1 million in each of the three and six months ended March 31, 2025, compared to the same period of fiscal 2024 primarily due to higher profitability of our equity affiliate in Venezuela.

Net income (loss) attributable to noncontrolling interests, net of tax, decreased by $2 million in the second quarter of fiscal 2025 compared to the same period of fiscal 2024 primarily due to lower earnings of our joint ventures in China and the Czech Republic. Net income (loss) attributable to noncontrolling interests, net of tax, decreased by $2 million in the first six months of fiscal 2025 compared to the same period of fiscal 2024 primarily due to lower earnings of our joint venture in the Czech Republic.

Net Income Attributable to Cabot Corporation

In the second quarter of fiscal 2025 and fiscal 2024, we reported Net income (loss) attributable to Cabot Corporation of $94 million ($1.69 per diluted common share) and $84 million ($1.49 per dilution common share), respectively. The higher Net income in the second quarter of fiscal 2025 compared with the same period in fiscal 2024 was primarily due to higher Segment EBIT in Performance Chemicals ($19 million) and lower Argentina controlled currency devaluation and other losses ($8 million), partially offset with lower Segment EBIT in Reinforcement Materials ($18 million).

In the first six months of fiscal 2025 and fiscal 2024, we reported Net income (loss) attributable to Cabot Corporation of $187 million ($3.36 per diluted common share) and $134 million ($2.37 per dilution common share), respectively. The higher Net income in the first six months of fiscal 2025 compared with the same period in fiscal 2024 was primarily due to lower Argentina controlled currency devaluation and other losses ($41 million) and higher Segment EBIT ($13 million).

Second quarter of Fiscal 2025 versus Second quarter of Fiscal 2024—By Business Segment

Income (loss) before income taxes and equity in earnings of affiliated companies, Certain items, Other unallocated items and Total segment EBIT for the three and six months ended March 31, 2025 and 2024 are included in the following table, and details of each item is set forth in the sections below.

(In millions)

Certain Items

Details of the certain items for the three and six months ended March 31, 2025 and 2024 are as follows:

(In millions)

Other Unallocated Items

(In millions)

Total other unallocated items remained flat and decreased by $2 million for each of the three and six months ended March 31, 2025, respectively, when compared to the same periods in fiscal 2024.

A discussion of items that we refer to as “other unallocated items” can be found under the heading “Definition of Terms and Non-GAAP Financial Measures”. The balances of unallocated corporate costs are primarily comprised of expenditures related to managing a public company that are not allocated to the segments and corporate business development costs related to ongoing corporate projects. The balances of General unallocated income (expense) consist of gains (losses) arising from foreign currency transactions, net of other foreign currency risk management activities, interest and dividend income, the profit or loss related to the corporate adjustment for unearned revenue and unrealized holding gains (losses) for investments. This does not include items of income or expense from the items that are separately treated as Certain items.

Reinforcement Materials

Sales and EBIT for Reinforcement Materials for the second quarter of fiscal 2025 and 2024 were as follows:

(In millions)

Sales in Reinforcement Materials decreased by $82 million in the second quarter of fiscal 2025 compared to the same period of fiscal 2024 primarily due to lower volumes ($48 million), the less favorable impact of foreign currency translation ($22 million) and less favorable pricing and product mix ($12 million). The lower volumes were primarily due to lower tire demand and contract outcomes in South America. The less favorable pricing and product mix was primarily due to lower raw materials costs that are generally passed through to our customers.

In the first six months of fiscal 2025, sales in Reinforcement Materials decreased by $112 million as compared to the first six months of fiscal 2024 primarily due to lower volumes ($44 million), less favorable pricing and product mix ($39 million) and the less favorable impact from foreign currency translation ($24 million). The lower volumes were primarily due to lower tire demand. The less favorable pricing and product mix was primarily due to lower raw materials costs that are generally passed through to our customers.

EBIT in Reinforcement Materials in the second quarter of fiscal 2025 decreased by $18 million compared to the same period of fiscal 2024. The decrease in EBIT was primarily driven by lower volumes from lower tire demand and contract outcomes in South America ($20 million).

In the first six months of fiscal 2025, EBIT in Reinforcement Materials decreased by $17 million compared to the same period of fiscal 2024. The decrease was primarily driven by lower volumes from lower tire demand ($18 million).

As we look to the third quarter of the fiscal year, we expect the Reinforcement Materials segment EBIT to decline modestly from the second quarter of fiscal 2025 as we anticipate lower volumes in reaction to the uncertain macroeconomic backdrop.

Performance Chemicals

Sales and EBIT for Performance Chemicals for the second quarter of fiscal 2025 and 2024 were as follows:

(In millions)

Sales in Performance Chemicals remained flat in the second quarter of fiscal 2025 as compared to the same period of fiscal 2024 as higher volumes ($16 million) were offset by less favorable pricing and product mix ($12 million) and the unfavorable impact from foreign currency translation ($6 million). The higher volumes were primarily in our Fumed Metal Oxides product line as volumes related to construction and semiconductor applications reconnected to underlying demand drivers. The less favorable pricing and product mix was primarily from lower raw material costs which, in certain instances, are passed through to our customers through formulas and other market-based adjustments.

In the first six months of fiscal 2025, sales in Performance Chemicals increased by $26 million as compared to the first six months of fiscal 2024 primarily due to higher volumes ($50 million), partially offset by less favorable pricing and product mix ($25 million). The higher volumes were primarily due to higher demand in all product lines as volumes have reconnected to underlying demand drivers in key end markets. The less favorable pricing and product mix was primarily due to lower raw material costs which, in certain instances, are passed through to our customers through formulas and other market-based adjustments.

EBIT in Performance Chemicals increased by $19 million in the second quarter of fiscal 2025 as compared to the same period of fiscal 2024 primarily due to higher gross profit per ton ($9 million), and higher volumes ($9 million). The higher gross profit per ton was primarily from targeted price increases, cost savings and optimization measures across the segment. The higher volumes were primarily in our Fumed Metal Oxides product line as volumes related to construction and semiconductor applications reconnected to underlying demand drivers.

In the first six months of fiscal 2025, EBIT in Performance Chemicals increased by $30 million as compared to the same period of fiscal 2024. The increase was driven primarily by higher volumes ($29 million). The higher volumes were driven by higher demand in all product lines as volumes have reconnected to underlying demand drivers in key end markets.

As we look to the third quarter of the fiscal year, we expect the Performance Chemicals segment EBIT to be flat sequentially to the second quarter of fiscal 2025 as expected seasonal volume increases are expected to be offset by customer destocking in China.

Tariffs

Given the dynamic nature of the tariff announcements, related delays and ongoing negotiations between countries, we are assessing the potential impact. In most cases, Cabot manufactures products in the countries or regions in which they are sold which reduces our direct exposure to tariffs. There are small amounts of cross-border sales, where we are directly exposed to tariff increases, but we expect in those cases to be able to pass on changes in pricing through contractual formulas and increases in spot pricing that will limit the impact. The varying levels of implemented, proposed and paused tariffs around the world are causing some of our customers to be cautious in the short-term as they reduce inventory levels until the tariff guidelines are clear.

Liquidity and Capital Resources

Overview

Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, decreased by $168 million during the first six months of fiscal 2025, which was largely due to a higher outstanding commercial paper balance at the end of the period. As of March 31, 2025, we had cash and cash equivalents of $213 million and borrowing availability under our revolving credit agreements of $1.0 billion. We have access to borrowings under the following two credit agreements:

• $1 billion unsecured revolving credit agreement (the “U.S. Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and the other lenders party thereto, which matures in August 2027. The U.S. Credit Agreement supports our issuance of commercial paper, and borrowings under it may be used for working capital, letters of credit and other general corporate purposes.
• €300 million unsecured revolving credit agreement (the “Euro Credit Agreement”, and together with the U.S. Credit Agreement, the “Credit Agreements”), with PNC Bank, National Association, as Administrative Agent, and the other lenders party thereto, which matures in August 2027. Borrowings under the Euro Credit Agreement may be used for the repatriation of earnings of our foreign subsidiaries to the United States, the repayment of indebtedness of our foreign subsidiaries owing to us or any of our subsidiaries and for working capital and general corporate purposes.

As of March 31, 2025, we were in compliance with the debt covenants under the Credit Agreements, which, with limited exceptions, require us to comply on a quarterly basis with a leverage test requiring the ratio of consolidated net debt to consolidated EBITDA not to exceed 3.50 to 1.00. Consolidated net debt is defined as consolidated debt offset by the lesser of (i) unrestricted cash and cash equivalents and (ii) $150 million.

A significant portion of our business occurs outside the U.S. and our cash generation does not always align geographically with our cash needs. The vast majority of our cash and cash equivalent holdings tend to be held outside the U.S. We generally use a combination of U.S. earnings, repatriation of certain foreign earnings, commercial paper issuances and borrowings under our U.S. Credit Agreement to meet our U.S. cash needs. With the exception of Argentina, which has some currency controls that prevent the distribution of cash, we are generally able to move cash throughout the Company through our cash pooling structures, intercompany accounts and/or distributions, as needed. Although we repatriate certain foreign earnings, cash held by foreign subsidiaries is generally considered permanently reinvested and is used to finance the subsidiaries’ operational activities and future investments. We usually reduce our commercial paper balance and, if applicable, borrowings under our Credit Agreements, at quarter-end using cash derived from customer collections, including the utilization of customer supply chain financing programs, settlement of intercompany balances and short-term intercompany loans. If additional funds are needed in the U.S., we expect to be able to repatriate cash, including cash from China, while paying any withholding or other taxes. Changes in regulations and tax laws in the U.S. or foreign countries could restrict our ability to transfer funds or impose material costs on such transfers.

As of each of March 31, 2025 and September 30, 2024, we had $114 million and $113 million, respectively, of borrowings under the Euro Credit Agreement and no outstanding borrowings under the U.S. Credit Agreement at either date. There was $190 million and $45 million of commercial paper outstanding as of March 31, 2025 and September 30, 2024, respectively.

We anticipate sufficient liquidity from (i) cash on hand; (ii) cash flows from operating activities; and (iii) cash available from the Credit Agreements and our commercial paper program to meet our operational and capital investment needs and financial obligations for both the next twelve months and the foreseeable future. The liquidity we derive from cash flows from operations is, to a large degree, predicated on our ability to collect our receivables in a timely manner, the cost of our raw materials, and our ability to manage inventory levels.

The following discussion of the changes in our cash balance refers to the various sections of our Consolidated Statements of Cash Flows.

Cash Flows from Operating Activities

Cash provided by operating activities, which consists of net income adjusted for the various non-cash items included in income, changes in working capital and changes in certain other balance sheet accounts, totaled $197 million in the first six months of fiscal 2025 compared to $281 million of cash provided by operating activities during the same period of fiscal 2024.

Cash provided by operating activities in the first six months of fiscal 2025 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $75 million and cash dividends received from one of our equity investments of $12 million, which was offset by an increase in net working capital of $114 million. The increase in net working capital was largely driven by a decrease in Accounts Payable and accrued liabilities, and an increase in Accounts and notes receivable.

Cash provided by operating activities in the first six months of fiscal 2024 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $78 million and foreign exchange losses of $36 million, primarily related to devaluation of the Argentine peso, which was partially offset by an increase in net working capital of $25 million. The increase in net working capital was largely driven by a decrease in Accounts payable and accrued expenses and an increase in Inventories and Accounts and notes receivable.

Cash Flows from Investing Activities

Investing activities consumed $174 million of cash in the first six months of fiscal 2025 compared to $95 million of cash consumed in the first six months of fiscal 2024.

In the first six months of fiscal 2025 and 2024, investing activities included $149 million and $97 million, respectively, of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital. In addition, in the first six months of fiscal 2025, investing activities included $27 million for cash paid for the asset acquisition described in Note C of our Notes to the Consolidated Financial Statements.

Capital expenditures for fiscal 2025 are expected to be between $250 million and $275 million. Our planned capital spending program for fiscal 2025 is for sustaining, compliance and improvement capital projects at our operating facilities as well as capacity expansion capital expenditures.

Cash Flows from Financing Activities

Financing activities consumed $7 million of cash in the first six months of fiscal 2025 compared to $195 million of cash consumed during the same period of fiscal 2024.

In the first six months of fiscal 2025, financing activities primarily consisted of share repurchases of $89 million, dividend payments to stockholders of $47 million, and cash dividends paid to noncontrolling interests of $20 million. There were also net proceeds from the issuance of commercial paper of $145 million.

In the first six months of fiscal 2024, financing activities primarily consisted of net repayment of commercial paper of $85 million, share repurchases of $57 million, dividend payments to stockholders of $45 million, cash dividends paid to noncontrolling interests of $12 million, and repayments of long-term debt of $9 million. These payments were partially offset by proceeds from sales of common stock of $13 million from stock option exercises.

Forward-Looking Information

This report on Form 10-Q contains “forward-looking statements” under the Federal securities laws. These forward-looking statements address expectations or projections about the future, including our expectations regarding our future business performance and overall prospects, including for earnings, EBIT and volumes in our Reinforcement Materials segment in the third quarter of fiscal 2025, and for EBIT and volumes in our Performance Chemicals segment in the third quarter of fiscal 2025, and the principal assumptions underlying these expectations, including with respect to the impact from tariffs on demand for our products and our ability to pass on increased costs from tariffs to our customers through pricing; the possible direct and indirect impact of trade tariffs on our operations, and demand for our products, the sufficiency of our cash on hand, cash provided from operations and cash available under our credit and commercial paper facilities to fund our cash requirements in both the next twelve months and the foreseeable future; anticipated capital spending; regulatory developments, including regulatory compliance costs and potential impact on our operations; cash requirements and uses of available cash, including future cash outlays associated with respirator liabilities and the timing of such outlays; amortization expenses; our operating tax rate; and the possible outcome of legal and environmental proceedings. From time to time, we also provide forward-looking statements in other materials we release to the public and in oral statements made by authorized officers.

Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control or difficult to predict. If known or unknown risks materialize, our actual results could differ materially from those expressed in the forward-looking statements.

In addition to factors described elsewhere in this report, the following are some of the factors that could cause our actual results to differ materially from those expressed in our forward-looking statements: industry capacity utilization and competition from other specialty chemical companies; safety, health and environmental requirements and related constraints imposed on our business; regulatory and financial risks related to climate change developments; volatility in the price and availability of energy and raw materials, including with respect to the Russian invasion of Ukraine and the U.S.-China trade relationship; a significant adverse change in a customer or joint venture relationship or the failure of a customer or joint venture partner to perform its obligations under agreements with us; failure to achieve growth expectations from new products, applications and technology developments; failure to realize benefits from acquisitions, alliances, or joint ventures or achieve our portfolio management objectives; negative or uncertain worldwide or regional economic conditions and market opportunities, including from trade relations, global health matters or geo-political conflicts; litigation or legal proceedings; interest rates, tax rates, tariffs, currency exchange controls, and fluctuations in foreign currency; our inability to complete capacity expansions or other development projects; and the accuracy of the assumptions we used in establishing reserves for our share of liability for respirator claims. These other factors and risks are discussed more fully in our 2024 10-K and in our subsequent SEC filings.

Information about market risks for the period ended March 31, 2025 does not differ materially from that discussed under Item 7A of our 2024 10-K.

As of March 31, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of that date.

There were no changes in our internal controls over financial reporting that occurred during our fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.