CABOT CORP
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
CBT$71.05-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0000950170-24-012680
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000950170-24-057010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 106 current paragraphs.
47 unchanged; 45 reworded; 12 added; 3 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Second quarter of Fiscal 2024 versus Second quarter of Fiscal 2023—Consolidated
Current report
The higher net income in the first six months of fiscal 2024 compared with the same period in fiscal 2023 is primarily due to higher Total segment EBIT ($70 million) and higher General unallocated income ($22 million) partially offset by foreign currency losses and a loss on the sale of BOPREAL bonds ($41 million combined) in Argentina and a higher provision for income taxes ($32 million).
Current report
Sales in Reinforcement Materials increased by $4 million in the second quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to higher volumes ($41 million) partially offset by less favorable price and product mix ($36 million). The higher volumes in the second quarter of fiscal 2024 were driven by higher volumes in Asia and Europe. The less favorable pricing was driven primarily from lower raw material costs that are generally passed through to our customers.
Current report
In the first six months of fiscal 2024, EBIT in Reinforcement Materials increased by $62 million compared to the same period of fiscal 2023. The increase was driven by higher unit margins, net of costs ($41 million) and higher volumes ($20 million). The higher unit margins in the first six months of fiscal 2024 were primarily driven by favorable price and product mix in the 2023 and 2024 calendar year customer agreements. The higher volumes were driven by higher volumes in Asia and Europe.
Current report
As we look to the third quarter of the fiscal year, we expect the Reinforcement Materials EBIT to be in line with the second quarter of fiscal 2024 as we expect modest volume improvement to be offset by higher costs associated with plant maintenance.
Current report
In the first six months of fiscal 2024, sales in Performance Chemicals decreased by $16 million compared to the first six months of fiscal 2023, primarily due to less favorable price and product mix ($47 million), partially offset by higher volumes ($30 million). The less favorable pricing was primarily due to lower raw material costs that are generally passed through to our customers. The higher volumes in the first six months of fiscal 2024 were primarily in our specialty carbons and specialty compounds product lines.
Current report
In the first six months of fiscal 2024, EBIT in Performance Chemicals increased by $8 million compared to the same period of fiscal 2023. The increase was driven by higher unit margins, net of costs ($7 million) and higher volumes ($11 million), partially offset by the unfavorable impact of a reduction in inventory levels ($5 million) and the unfavorable impact of foreign currency translation ($4 million).
Current report
net working capital was largely driven by a decrease in accounts receivable due to lower customer prices from lower cost of raw
Current report
materials and decreased sales volumes and a decrease in inventories and accounts payable and accrued expenses driven by lower
Current report
cost of raw materials.
Current report
Province of Ontario Regulation 419 Update
Current report
As described in Part I, Item 1 of the 2023 10-K under the heading “Safety, Health, Environment, and Sustainability”, under the Province of Ontario Ministry of Environment, Conservation and Parks’ (“MECP”) Regulation 419, a new requirement for sulfur dioxide (“SO2”) emissions went into effect on July 1, 2023 for our reinforcing carbons plant in Sarnia, Ontario. We are out of compliance with the new air standards for SO2 and are in discussions with the MECP on an alternative to this requirement that we expect, in its current form, would require the installation of air pollution controls at the plant by July 1, 2028. To date, this has not restricted our ability to operate our reinforcing carbons plant in Sarnia, Ontario as we are working with the MECP for a solution. We anticipate that we will need to incur significant capital costs for the installation of these new SO2 emissions controls, particularly during the 24-month period prior to the date of installation.
Removed paragraphs (3)
Previous report
First quarter of Fiscal 2024 versus First quarter of Fiscal 2023—Consolidated
Previous report
As we look to the second quarter of the fiscal year, we expect the Reinforcement Materials EBIT to improve sequentially due to higher pricing and product mix related to the outcome of negotiations on our calendar year 2024 customer agreements and modestly higher sequential volumes.
Previous report
The higher volumes in the first quarter of fiscal 2024 were primarily in our specialty carbons, specialty compounds and fumed metal oxides product lines.
Reworded paragraphs (45)
Previous wording
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 next 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.
Current wording
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.
Previous wording
Our discussion under the heading “First Quarter of Fiscal 2024 versus First Quarter of Fiscal 2023—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 “First quarter of Fiscal 2024 versus First quarter of Fiscal 2023—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.
Current wording
Our discussion under the heading “Second Quarter of Fiscal 2024 versus Second Quarter of Fiscal 2023—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 2024 versus Second quarter of Fiscal 2023—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.
Previous wording
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.
Current wording
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.
Previous wording
During the first quarter of fiscal 2024, Income (loss) before income taxes and equity in earnings of affiliated companies increased compared to the first quarter of fiscal 2023. The increase was driven by higher earnings in our Reinforcement Materials and Performance Chemicals segments and increased investment income in Argentina partially offset by foreign exchange losses primarily in Argentina.
Current wording
During the second quarter of fiscal 2024, Income (loss) before income taxes and equity in earnings of affiliated companies increased compared to the second quarter of fiscal 2023. The increase was driven by higher earnings in our Reinforcement Materials and Performance Chemicals segments, increased investment income in Argentina and lower foreign exchange losses primarily in Argentina.
Previous wording
The $7 million decrease in Net sales and other operating revenues in the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 was driven by unfavorable price and product mix (combined $48 million) across our Reinforcement Materials and Performance Chemicals segments driven by the pass through of lower raw material costs, partially offset by higher volumes ($35 million).
Current wording
The $21 million decrease in Net sales and other operating revenues in the first six months of fiscal 2024 compared to the first six months of fiscal 2023 was driven by unfavorable price and product mix (combined $110 million) across our Reinforcement Materials and Performance Chemicals segments driven by lower pricing from the pass through of lower raw material costs, partially offset by higher volumes (combined $87 million).
Previous wording
Gross profit increased by $37 million in the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. The increase was primarily due to higher volumes and higher unit margins within the Reinforcement Materials and Performance Chemicals segments.
Current wording
For the three and six months ended March 31, 2024, gross profit increased by $36 million and $73 million, respectively, compared to the same periods of fiscal 2023. The increases were primarily due to higher unit margins and higher volumes within the Reinforcement Materials and Performance Chemicals segments.
Previous wording
Selling and administrative expenses increased by $7 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to an increase in the incentive compensation expense.
Current wording
Selling and administrative expenses increased by $9 million and $16 million in the second quarter of fiscal 2024 and for the six months ended March 31, 2024, respectively, compared to the same periods of fiscal 2023, primarily due to an increase in the incentive compensation expense.
Previous wording
Research and technical expenses increased by $2 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023.
Current wording
Research and technical expenses remained flat in the second quarter of fiscal 2024 and increased by $2 million for the six months ended March 31, 2024, compared to the same period of fiscal 2023.
Previous wording
There was no Loss on sale of business in the first quarter of fiscal 2024. Previously reported Loss on sale of business in fiscal 2023 is associated with the fiscal 2022 divesture of the Purification Solutions business.
Current wording
There was no Loss on sale of business in the second quarter of fiscal 2024 or fiscal 2023. Previously reported Loss on sale of business in fiscal 2023 is associated with the fiscal 2022 divesture of the Purification Solutions business.
Previous wording
Interest and dividend income increased by $3 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to higher interest rates.
Current wording
Interest and dividend income decreased by $1 million in the second quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to lower average balances. Interest and dividend income increased by $2 million for the six months ended March 31, 2024 compared to the same period of fiscal 2023, primarily due to higher interest rates.
Previous wording
Interest expense remained flat in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to lower commercial paper balances, offset by higher rates.
Current wording
Interest expense decreased by $2 million in the three and six months ended March 31, 2024 compared to the same periods of fiscal 2023, primarily due to lower average commercial paper balances, partially offset by higher rates.
Previous wording
Other expense increased by $24 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to foreign currency losses on the revaluation of our Argentine peso monetary assets and liability balances ($40 million), partially offset by investment income ($12 million) on our cash and cash equivalent balances in Argentina.
Current wording
Other expense decreased by $4 million in the second quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to lower foreign currency losses on the revaluation of our Argentine peso monetary assets and liability balances ($9 million), and higher investment income ($2 million) on our cash and cash equivalent balances in Argentina and Brazil, partially offset by a loss on the sale of BOPREAL bonds (standing for “Bond for the Reconstruction of a free Argentina” in Spanish) in Argentina ($8 million). Other expense increased by $20 million for the six months ended March 31, 2024, as compared to the same period of fiscal 2023, primarily due to higher foreign currency losses in Argentina including from the impact of the government devaluation of the currency that occurred during the first quarter of fiscal 2024.
Previous wording
For the three months ended December 31, 2023, the (Provision) benefit for income taxes was a provision of $34 million compared to a $20 million provision for the three months ended December 31, 2022, 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.
Current wording
For the three months ended March 31, 2024, the (Provision) benefit for income taxes was a provision of $47 million compared to a $29 million provision for the same period in fiscal 2023. For the six months ended March 31, 2024, the (Provision) benefit for income taxes was a provision of $81 million compared to a $49 million provision for the same period in fiscal 2023, primarily due to higher earnings in the current period and additional accruals and corresponding interest of uncertain tax positions. 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.
Previous wording
For fiscal 2024, the Company expects the Operating tax rate to be in the range of 28% to 30%. 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.
Current wording
For fiscal 2024, the Company expects 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.
Previous wording
Equity in earnings of affiliated companies, net of tax, decreased by $1 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to lower profitability at our equity affiliate in Venezuela.
Current wording
Equity in earnings of affiliated companies, net of tax, increased by $1 million in the second quarter compared to the same period of fiscal 2023 primarily due to higher profitability at our equity affiliate in Venezuela. Equity in earnings of affiliated companies, net of tax, remained flat for the first six months of fiscal 2024 compared to the same period of fiscal 2023.
Previous wording
Net income (loss) attributable to noncontrolling interests, net of tax, decreased by $1 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023.
Current wording
Net income (loss) attributable to noncontrolling interests, net of tax, increased by $6 million and $5 million in the second quarter and the first six months of fiscal 2024, respectively, compared to the same periods of fiscal 2023, primarily due to higher profitability of our joint ventures in China.
Previous wording
In the first quarter fiscal 2024, we reported Net income (loss) attributable to Cabot Corporation of $50 million, or $0.88 per diluted common share. This compares to Net income (loss) attributable to Cabot Corporation of $54 million, or $0.93 per diluted common share, in the first quarter of fiscal 2023. The lower net income in the first quarter of fiscal 2024 compared with the same period in fiscal 2023 is primarily due to higher foreign currency losses of $40 million in Argentina, a higher provision for income taxes of $14 million, partially offset by higher Total segment EBIT of $40 million and higher General unallocated income of $9 million.
Current wording
In the second quarter and the first six months of fiscal 2024, we reported Net income (loss) attributable to Cabot Corporation of $84 million and $134 million, or $1.49 and $2.37 per diluted common share, respectively. This compares to Net income (loss) attributable to Cabot Corporation of $75 million and $129 million, or $1.29 and $2.23 per diluted common share, respectively, in the second quarter and the first six months of fiscal 2023. The higher net income in the second quarter of fiscal 2024 compared with the same period in fiscal 2023 is primarily due to higher Total segment EBIT ($30 million) and higher General unallocated income ($13 million) partially offset by a loss on the sale of BOPREAL bonds ($8 million) in Argentina and a higher provision for income taxes ($18 million).
Previous wording
First quarter of Fiscal 2024 versus First quarter of Fiscal 2023—By Business Segment
Current wording
Second quarter of Fiscal 2024 versus Second quarter of Fiscal 2023—By Business Segment
Previous wording
Income (loss) before income taxes and equity in earnings of affiliated companies, certain items, other unallocated items and Total segment EBIT for the three months ended December 31, 2023 and 2022 are set forth in the table below. The details of certain items and other unallocated items are shown below and in Note K of our Notes to the Consolidated Financial Statements.
Current wording
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, 2024 and 2023 are set forth in the table below. The details of certain items and other unallocated items are shown below and in Note K of our Notes to the Consolidated Financial Statements.
Previous wording
In the first quarter of fiscal 2024, Income (loss) before income taxes and equity in earnings of affiliated companies increased by $10 million and Total segment EBIT increased by $40 million. The increase in Income (loss) before income taxes and equity in earnings of affiliated companies was largely driven by higher Total segment EBIT partially offset by higher foreign currency losses in Argentina. Total segment EBIT was driven by higher volumes in both the Reinforcement Materials and Performance Chemicals segments (combined $13 million) and higher pricing and improved product mix, net of costs in Reinforcement Materials ($28 million).
Current wording
In the first six months of fiscal 2024, Income (loss) before income taxes and equity in earnings of affiliated companies increased by $42 million and Total Segment EBIT increased by $70 million. The increase in Income (loss) before income taxes and equity in earnings of affiliated companies was largely driven by higher Total segment EBIT partially offset by higher foreign currency losses primarily in Argentina. Total segment EBIT was driven by higher pricing and improved product mix, net of costs in Reinforcement Materials ($41 million) and higher volumes in both the Reinforcement Materials and Performance Chemicals segments (combined $31 million).
Previous wording
Details of the certain items for the three months ended December 31, 2023 and 2022 are as follows:
Current wording
Details of the certain items for the three and six months ended March 31, 2024 and 2023 are as follows:
Previous wording
Total Other unallocated items increased by $8 million due to higher General unallocated income (expense) resulting from higher investment income on our cash and cash equivalent balances in Argentina.
Current wording
Total other unallocated items decreased by $12 million and $20 million for the three and six months ended March 31, 2024, respectively, when compared to the same period in fiscal 2023, due to higher General unallocated income (expense) resulting from higher investment income on our cash and cash equivalent balances in Argentina and lower foreign exchange losses primarily in Argentina.
Previous wording
Sales and EBIT for Reinforcement Materials for the first quarter of fiscal 2024 and 2023 were as follows:
Current wording
Sales and EBIT for Reinforcement Materials for the second quarter and first six months of fiscal 2024 and 2023 were as follows:
Previous wording
Sales in Reinforcement Materials decreased by $2 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to less favorable price and product mix (combined $27 million), partially offset by higher volumes ($16 million) and the favorable impact from foreign currency translation ($9 million). The less favorable price and product mix was primarily due to lower raw material costs in China that are generally passed through to our customers and were partially offset by favorable price and product mix in the 2023 calendar year customer agreements. The higher volumes in the first quarter of fiscal 2024 were driven by higher volumes in Europe and Asia.
Current wording
In the first six months of fiscal 2024, sales in Reinforcement Materials increased by $2 million compared to the first six months of fiscal 2023 primarily due to higher volumes ($57 million), the favorable impact from foreign currency translation ($6 million) and higher by-product revenue ($2 million), partially offset by less favorable price and product mix ($63 million). The higher volumes in the first six months of fiscal 2024 were driven by higher volumes in Asia and Europe. The less favorable pricing was primarily due to lower raw material costs that are generally passed through to our customers.
Previous wording
EBIT in Reinforcement Materials in the first quarter of fiscal 2024 increased by $35 million compared to the same period of fiscal 2023. During the first quarter of fiscal 2024, the segment had higher unit margins, net of costs ($28 million) and higher volumes ($5 million). The higher unit margins in the first quarter of fiscal 2024 were primarily driven by favorable pricing and product mix in the 2023 calendar year customer agreements. The higher volumes were driven by higher volumes in Europe and Asia. The higher costs were primarily driven by higher selling and administrative expense.
Current wording
EBIT in Reinforcement Materials in the second quarter of fiscal 2024 increased by $27 million compared to the same period of fiscal 2023. The increase was driven by higher unit margins, net of costs ($11 million) and higher volumes ($15 million). The higher unit margins in the first quarter of fiscal 2024 were primarily driven by favorable price and product mix in the 2024 calendar year customer agreements. The higher volumes were driven by higher volumes in Asia and Europe.
Previous wording
Sales and EBIT for Performance Chemicals for the first quarter of fiscal 2024 and 2023 were as follows:
Current wording
Sales and EBIT for Performance Chemicals for the second quarter and first six months of fiscal 2024 and 2023 were as follows:
Previous wording
Sales in Performance Chemicals decreased by $1 million in the first quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to less favorable price and product mix (combined $22 million), partially offset by higher volumes ($19 million) and the favorable impact from foreign currency translation ($3 million). The less favorable price and product mix was primarily due to lower raw material costs that are generally passed through to our customers in our specialty carbons product line.
Current wording
Sales in Performance Chemicals decreased by $15 million in the second quarter of fiscal 2024 compared to the same period of fiscal 2023, primarily due to less favorable price and product mix ($25 million), partially offset by higher volumes ($10 million). The less favorable pricing was primarily due to lower raw material costs that are generally passed through to our customers. The higher volumes in the second quarter of fiscal 2024 were primarily in our specialty carbons and specialty compounds product lines.
Previous wording
EBIT in Performance Chemicals increased by $5 million in the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 primarily due to higher volumes ($7 million). The higher volumes in the first quarter of fiscal 2024 were primarily in our specialty carbons, specialty compounds and fumed metal oxides product lines.
Current wording
EBIT in Performance Chemicals increased by $3 million in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023 primarily due to higher volumes ($3 million). The higher volumes in the second quarter of fiscal 2024 were primarily in our specialty carbons and specialty compounds product lines.
Previous wording
As we look ahead to the second quarter of the fiscal year, we expect seasonally higher volumes will be more than offset by higher fixed costs, including higher costs associated with maintenance activities and the reduction of inventory levels.
Current wording
As we look ahead to the third quarter of the fiscal year, we expect seasonally higher volumes and relatively stable unit margins.
Previous wording
Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, decreased by $14 million during the first three months of fiscal 2024, which was largely due to a higher outstanding commercial paper balance at the end of the period. As of December 31, 2023, we had cash and cash equivalents of $244 million and borrowing availability under our revolving credit agreements of $1.0 billion. We have access to borrowings under the following two credit agreements:
Current wording
Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, increased by $67 million during the first six months of fiscal 2024, which was largely due to a lower outstanding commercial paper balance at the end of the period. As of March 31, 2024, we had cash and cash equivalents of $206 million and borrowing availability under our revolving credit agreements of $1.1 billion. We have access to borrowings under the following two credit agreements:
Previous wording
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 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, 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.
Current wording
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 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.
Previous wording
In addition to the currency controls that prevent the distribution of cash in Argentina, there are also regulations that require that all cash in Argentina be held in Argentine pesos and regulations that place restrictions related to how and when suppliers of imported goods and services into Argentina can be paid. These regulations likely come with increased costs and future regulations could further restrict our operations in Argentina.
Current wording
In addition to the currency controls that prevent the distribution of cash in Argentina, there are also government regulations that require all cash in Argentina to be held in Argentine pesos and regulations that restrict how and when suppliers of imported goods and services into Argentina can be paid. In accordance with government regulations, we purchased and sold at a discount BOPREAL bonds during the second quarter of fiscal 2024 to partially repay imported goods received on or prior to December 12, 2023. The balance of these outstanding payables was paid in April 2024. Current and future imported goods and services will be paid in accordance with new regulations enacted in the latter part of calendar year 2023. Future regulations could impact our ability to pay suppliers for our imported goods and services.
Previous wording
As of December 31, 2023, we had $1.0 billion of availability under our Credit Agreements. As of December 31, 2023, we had $124 million of borrowings under the Euro Credit Agreement and no outstanding borrowings under the U.S. Credit Agreement. There was $205 million of commercial paper outstanding as of December 31, 2023.
Current wording
As of March 31, 2024, we had $1.1 billion of availability under our Credit Agreements. As of March 31, 2024, we had $114 million of borrowings under the Euro Credit Agreement and no outstanding borrowings under the U.S. Credit Agreement. There was $87 million of commercial paper outstanding as of March 31, 2024.
Previous wording
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 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.
Current wording
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.
Previous wording
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 $105 million in the first three months of fiscal 2024 compared to $52 million of cash provided by operating activities during the same period of fiscal 2023 primarily due to improved segment EBIT.
Current wording
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 $281 million in the first six months of fiscal 2024 compared to $214 million of cash provided by operating activities during the same period of fiscal 2023.
Previous wording
Cash provided by operating activities in the first three months of fiscal 2024 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $41 million and foreign exchange losses of $34 million, primarily related to devaluation of the Argentine peso, which was partially offset by an increase in net working capital of $46 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.
Current wording
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 an increase in Accounts and notes receivable from higher sales volumes, partially offset by a decrease in Inventories and Accounts payable and accrued expenses driven by lower cost of raw materials.
Previous wording
Cash used by operating activities in the first three months of fiscal 2023 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $35 million, which was partially offset by an increase in net working capital of $34 million. The increase in net working capital was largely driven by a decrease in Accounts payable and accrued expenses, partially offset by a decrease in Accounts receivables.
Current wording
Cash provided by operating activities in the first six months of fiscal 2023 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $71 million and a decrease in net working capital of $25 million. The decrease in
Previous wording
Investing activities consumed $54 million of cash in the first three months of fiscal 2024 compared to $17 million in the first three months of fiscal 2023.
Current wording
Investing activities consumed $95 million of cash in the first six months of fiscal 2024 compared to $64 million of cash consumed in the first six months of fiscal 2023.
Previous wording
In the first three months of fiscal 2024, investing activities included $54 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital, including capacity expansion capital projects.
Current wording
In the first six months of fiscal 2024, investing activities included $97 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital, including capacity expansion capital projects.
Previous wording
In the first three months of fiscal 2023, investing activities included $35 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital, including capacity expansion projects, in Performance Chemicals, partially offset by proceeds from the sale of land of $7 million, proceeds from the sale of our Purification Solutions business of $6 million, and proceeds from insurance settlements of $6 million.
Current wording
In the first six months of fiscal 2023, investing activities included $86 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital, including capacity expansion projects in Performance Chemicals, partially offset by proceeds from the sale of land of $7 million, proceeds from the sale of our Purification Solutions business of $6 million, and proceeds from insurance settlements of $6 million.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The $14 million decrease in Net sales and other operating revenues in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023 was driven by unfavorable price and product mix (combined $61 million) across our Reinforcement Materials and Performance Chemicals segments driven by lower pricing from the pass through of lower raw material costs, partially offset by higher volumes in both our Reinforcement Materials and Performance Chemicals segments (combined $51 million).
Current report — wording carried from elsewhere
In the second quarter of fiscal 2024, Income (loss) before income taxes and equity in earnings of affiliated companies increased by $32 million and Total segment EBIT increased by $30 million. The increase in Income (loss) before income taxes and equity in earnings of affiliated companies was largely driven by higher Total segment EBIT. Total segment EBIT was driven by higher volumes in both the Reinforcement Materials and Performance Chemicals segments (combined $18 million) and higher pricing and improved product mix, net of costs in Reinforcement Materials ($11 million).
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Gain realized on the sale of land.