Good day, ladies and gentlemen. Thank you for standing by. Welcome to the fourth quarter fiscal year 2026 Cabot Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during a session, you will need to press star 101 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's call is being recorded. I'm going to turn it over to our first speaker, Robert Rist, Vice President of Investor Relations. Please go ahead.

Thank you, Victor. Good morning. I'd like to welcome you to the Cabot Corporation Earnings Teleconference. With me today are Erica McLaughlin, CEO and President, and Steve Delahunt, Interim CFO and Treasurer. Last night we released results for our fourth quarter of fiscal 2026, 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 this call. 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 the risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading forward-looking statements in the press release we issued last night and in our annual report on Form 10-K for the fiscal year ending September 30, 2025 and in subsequent filings we make with the SEC. all of which are also available on the company's website. In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. Any non-GAAP financial measure presented should not be considered to be an alternative to a financial measure required by GAAP. Any non-GAAP financial measure 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 investor section of our website. Also, as we typically do each year, I'd like to remind you that over the next several weeks in conjunction with the vesting of restricted stock awards under our long-term incentive equity program, officers of the company will be selling shares to pay tax and other obligations related to their rewards. I will now turn the call over to Erica who will discuss the fourth quarter highlights, followed by several company and business updates. Steve will review the fourth quarter financial highlights and the business segment results. Following this, Erica will provide comments on our fiscal 2027 outlook and then open the floor to questions. Erica?

Thank you, Rob. Good morning, ladies and gentlemen, and thank you for joining us today. Before we get into our fourth quarter results and full year results, I'd like to say a few words about our recently announced leadership transition. I'm honored to be joining you today for my first call as Cabot CEO and I'm excited about what's ahead. I'd also like to thank Sean for his leadership and for his support during this transition. We have strong businesses and a talented, experienced team and I'm fortunate to have that foundation to build on. Having the various roles I have had at Cabot over the past 24 years, I know our businesses and our team well, and you should expect continuity in how we manage the company, including our commitment to a strong balance sheet, an investment-grade credit profile, and our balanced capital allocation framework. My focus is on investing behind growth opportunities while staying disciplined in how we run the business to deliver long-term value for our shareholders. I'll share more on our priorities for fiscal 2027 later in the call. Now starting with our fiscal 2026 results, we finished the year with solid financial performance. In the fourth quarter, we delivered adjusted EPS of $1.61 with reinforcement materials generating $87 million of segment EBIT and performance chemicals delivering $60 million. We also generated $143 million in cash flow from operations during the quarter and returned $70 million to shareholders. For the full year, adjusted EPS was $6.42, reflecting strong execution across the portfolio despite a dynamic operating environment. Reinforcement materials delivered $379 million of segment EBIT and performance chemicals generated $235 million. Importantly, our earnings performance translated into strong cash generation. We generated $421 million of cash flow from operations for the year, giving us the flexibility to continue investing in the business while also returning significant cash to shareholders. In total, we returned $243 million to shareholders during fiscal 2026, including $97 million through dividends and $146 million through share repurchases. Taken together, these results demonstrate the strength of our portfolio, our focus on disciplined execution, and the cash generating capability of the company. Our progress this year also extended beyond our financial results. We advanced a number of strategic priorities that we believe strengthen our business and position us to create value over the long term. Let me highlight a few of those accomplishments. First, we successfully completed the acquisition of a reinforcing carbons facility in Mexico from Bridgestone. This acquisition strengthens our regional manufacturing footprint and enhances our ability to serve customers in the Americas. The facility is performing well, integration activities have been completed as planned, and we remain on track to meet our financial targets. The long-term supply agreement with Bridgestone also provides a strong foundation as we move forward. Our progress this year also extended to our sustainability performance with continued recognition from external third parties. For the sixth consecutive year, we earned a platinum sustainability rating from Ecovatus, its highest level of recognition. Ecovatus assesses the sustainability performance and management systems of more than 150,000 companies across more than 185 countries. and our platinum rating places Cabot among the top 1% of companies assessed globally. This year we improved our overall score by five points, our largest year-over-year improvement to date, while once again earning an outstanding rating in both the environment and labor and human rights categories. We were also recognized by the American Chemistry Council with two 2026 Responsible Care Awards. We received the Waste Management and Water Stewardship Award for an initiative at our Franklin, Louisiana facility and nearly all of our U.S. manufacturing facilities received the ACC Facility Safety Award based on their 2025 safety performance, reflecting our continued focus on strong safety practices across our operations. In addition, we also took actions to enhance our financial flexibility in a dynamic environment Our longstanding investment-grade credit profile enabled us to upsize our corporate credit facility and refinance our debt maturity on favorable terms. We increased our corporate credit facility to $1.3 billion, completed a $350 million senior notes offering at a 4.95% coupon, and ended the year with $1.5 billion of liquidity. This provides us with significant flexibility as we navigate the current environment and continue investing behind our strategic growth opportunities. And finally, Performance Chemicals had another strong year of strategic execution and financial performance, delivering a new level of segment EBIT. These results reflect a focused effort to grow in key end markets, such as batteries and electronics. Our progress in Battery Materials is a good example of how we are leveraging our global asset footprint and strong product development capabilities to drive meaningful growth. Let me spend a few minutes on the milestones we achieved this year. As we've highlighted on recent calls, Battery Materials represents an important long-term growth opportunity for Cabot. Fiscal 2026 was another year of meaningful progress both financially and strategically. For the year, Battery Materials delivered 43 million of EBITDA with an EBITDA margin of 26%. We are pleased with both the earnings contribution and the attractive margin profile we are achieving as we grow the business. These results were supported by strong customer demand and higher volumes and reflect the strength of our differentiated product portfolio, our deep and expanding relationships with leading battery customers, and our global manufacturing and technology footprint. One of the examples of where we built momentum with customers is the multi-year supply agreement with Powerco that we announced this year. This was an important milestone that expanded our partnership with a leading European battery manufacturer. The agreement supports Powerco in the localization of the battery supply chain as new lithium-ion battery capacity is built in Europe to serve growing electric vehicle and energy storage demand. Local supply is increasingly important to battery customers as they build more resilient and efficient supply chains. Our global manufacturing and technology footprint enables us to serve customers locally across the major battery regions. During fiscal 2026, we also progressed the number of investments to support this growing customer demand. We are investing to expand our capacity in a disciplined and capital efficient way. As we discussed last quarter, we announced a $125 million capacity expansion program in the U.S. and China. This amount is net of a $50 million grant from the U.S. Department of Energy that was agreed to this year to support our investments for advanced conductive additives capacity at existing U.S. Cabot locations. In addition to the investments we are making in the U.S., we are also adding conductive additives capacity in China to support continued battery growth with key customers. We expect this new capacity to begin contributing to earnings in fiscal 2028. We are making these investments against what we see as an attractive long-term market backdrop with battery demand currently projected to grow at a 15% CAGR through 2030. As we look specifically at fiscal 2027, we see this as an important investment year for battery materials. We expect to continue growing the business from the 43 million EBITDA delivered in fiscal 2026 and expect EBITDA to be in the high $40 million range in fiscal 2027. We expect the capacity expansions that we are making during fiscal 2027 will enable more significant growth in 2028 when the investments come online. So as we look to the future, we believe we are putting the pieces in place for the next phase of growth in battery materials. We have an attractive market opportunity, strong customer relationships, a differentiated product portfolio and targeted capacity investments that will expand our ability to serve customers across all major regions as demand grows. With that, I'll turn the call over to Steve to take you through our fourth quarter financial results and segment performance in more detail. Steve?

Thanks, Erica. In the fourth quarter, we delivered a JustDPS of $1.61, with strong results in performance chemicals partially offset by lower earnings in reinforcement materials. For the full year, a JustDPS with $6.42. Cash generation was a highlight of the quarter. We generated $143 million of cash flow from operations and $117 million of discretionary free cash flow, bringing full-year operating cash flow to $421 million. Capital expenditures were $55 million in the quarter and $207 million for the year. That reflects our balanced approach of maintaining and improving our existing operations while funding targeted growth investments including in battery materials. Our cash generation also allowed us to continue returning cash to shareholders as Erica mentioned. Our balance sheet remains strong. We ended the year with $254 million of cash and cash equivalents, debt of approximately $1.3 billion and $1.5 billion of liquidity. Following the refinancing actions completed during the year, we enter fiscal 27 with a solid investment grade credit profile, meaningful financial flexibility, Our full year operating tax rate was 29%. Overall, we closed fiscal 2026 with strong cash generation and a solid balance sheet, which gives us the flexibility to keep investing in growth while returning cash to shareholders. Let me now walk through the segment results in more detail, beginning with reinforcement materials. During the fourth quarter of fiscal 2026, EBIT for reinforcement materials was $87 million, compared with $119 million in the prior year quarter. EBITDA was $111 million and EBITDA margin was 18%. The year-over-year decline in earnings was primarily driven by lower gross profit per ton resulting from the outcomes of our calendar year 2026 customer agreements as well as a less favorable regional product mix. These impacts were partially offset by higher volumes. Global volumes increased 5% year-over-year driven by higher volumes in both Asia Pacific and the Americas. including higher volumes from our capacity addition in Indonesia in our acquisition in Mexico. We were pleased with the volume performance in the quarter, particularly given the mixed demand environment across regions. While the outcome of the 2026 customer agreements has pressured year-over-year comparisons, our team remains focused on operational performance, close customer engagement, and actions to improve the competitiveness and profitability of the business over the long term. Looking ahead to the first quarter fiscal 2027, we expect EBIT to improve modestly from the fourth quarter, despite normal seasonal volume patterns. We expect that improvement to be driven primarily by higher gross profit per ton as regional product mix becomes more favorable. On a year-over-year basis, we expect EBIT to be lower, primarily reflecting the outcomes of our calendar year 2026 customer agreement. Now turning to performance chemicals. Performance Chemicals finished fiscal 26 with another strong quarter, building on the momentum we've seen throughout the year. Segment EBIT increased 43% to $60 million from $42 million in the prior year quarter. EBIT grew 30% to $83 million, with EBITDA margin expanding to 24% from 21% over the same period. We're particularly pleased with the combination of earnings growth and margin expansion, which we believe reflects the strength of the portfolio and our continued focus on higher value applications. These results were supported by higher volumes in battery materials and specialty carbons compared with the year ago. We also benefited from a higher gross margin per ton, primarily driven by favorable product mix and lower costs. Importantly, we continue to see good momentum from several of the attractive growth markets we've been targeting, which is helping to offset software conditions in some of the more traditional end markets. Looking ahead to the first quarter, we expect performance chemical segment EBIT to be higher than the prior year period, primarily due to higher volumes, but below the strong level we delivered in the fourth quarter. Sequentially, we expect a timing of higher costs and a shift in the product mix to reduce EBIT by approximately six to eight million. The expected sequential change is primarily related to the timing of certain costs and seasonal sales patterns, rather than a change in the underlying momentum of the segment. Overall, we remain encouraged by the trajectory of the performance chemicals segment as we enter fiscal 2027 and by the growth opportunities across the portfolio. Below the segment level, we expect first quarter results to be impacted by higher corporate costs and a higher operating tax rate compared with the first quarter of fiscal 2026. I will now turn it back to Erica to discuss our outlook and closing remarks. Erica?

Thanks, Steve. Before turning to our outlook, let me spend a few minutes on the current business environment for both our reinforcement materials and performance chemical segments. Overall, the business environment for reinforcement materials includes a backdrop of relatively flat expectations for global tire production. Industry forecasts point to a global tire production that is expected to grow at 0.3% in calendar year 2026 and go up 0.9% in calendar year 2027. Within these global forecasts, there are differences in the tire production growth profile by region. In 2026, tire production is expected to decline in the Americas, Europe, and China, while strong growth in Southeast Asia is expected to support the modest global growth expectation. For 2027, the regional outlook also remains mixed, with growth led by Southeast Asia and Europe, relatively flat volumes expected in the Americas, and a decline in tire production in China. In addition to the outlook for tire production, tire trade flows are also an important piece of the backdrop for reinforcement materials. Across North America, tariffs and trade measures on imported tires have increased in recent years, particularly on imports from Asia. With these measures in place, tire imports into the region are down 5% year-to-date through August. While we have not yet seen this translate into higher tire production in 2026, Over time, lower import levels could provide support for regional tire production and reinforcement materials demand in North America. In Europe, anti-dumping duties took effect in July of 2026 on Chinese passenger and light truck tires, with most in a range of 25 to 45% depending on the company. Countervailing duties are expected to be added in December 2026, which would increase the total duties assessed by company. These additional countervailing duties are expected to be in the range of 5 to 10%. Tire imports into Europe are down 11% year-to-date through August, with tire imports from China declining significantly, and some of that volume has shifted to tire imports from Southeast Asia. Moving to South America, rising tire imports continue to pressure regional tire production. While Brazil has maintained a 25% tariff on imported passenger car tires since 2023, These measures have not been sufficient to meaningfully curb imports or ease competitive pressure on domestic tire producers. Tire imports into South America are up 21% year to date, continuing to weigh on regional tire production. These tire trends are expected to impact regional reinforcing carbons demand, as reinforcing carbons demand levels usually track directionally with the tire production by region. So as we look at the reinforcement materials overall, The external environment remains pressured, with relatively flat demand projected and differences across regions. We expect the strongest areas of demand to be growth in Southeast Asia and Mexico, which are well supported by the investments we have made for capacity in Indonesia and the acquisition in Mexico. In addition, we continue to optimize our global footprint to allow us to serve customers and to adapt as trade flows shift. Our long-standing relationships with leading tire makers allow us to work closely with them as they make choices around their capacity shifts. We will continue to remain nimble in our decisions to serve customers and improve the competitiveness of our global footprint. If I move to performance chemicals, the business environment is mixed as this segment benefits from a more diverse portfolio of end markets to serve than our reinforcement material segments. As you will recall, this segment serves a broad range of end markets with automotive, infrastructure, batteries, electronics, construction, and consumer applications. That diversity, combined with our participation in faster growing applications, has been an important source of strength, as our results this year demonstrate. Across certain end markets, demand levels have been impacted by the broader geopolitical and economic conditions. For example, automotive production has been relatively subdued with global light vehicle production expected to decline 1.8% in calendar year 2026. It is expected that automotive industry will stabilize in calendar 27 with modest global growth of a half a percent, although trends will continue to vary by region. The strongest growth is expected in South America and Southeast Asia, while North America is expected to return to modest growth. As a reminder, within performance chemicals, We participate in the automotive market across a range of applications, including coatings, adhesives, and conductive compounds for various plastic parts. Construction-related applications remain soft as well, particularly in China and Europe. New construction in China declined 25% year over year through August 2026, reflecting the continued weakness in the property market. European construction activity also remained in contraction, with residential construction particularly weak. The U.S. has been more resilient with building permits up 2% year-to-date through August. For Cabot, we supply products for silicone sealants, reinforcing composites, and insulation materials that are used in construction end markets. At the same time, there are many areas of attractive growth across several end markets served by performance chemicals, such as batteries, conductive, and electronics applications. Battery demand continues to benefit from growing electric vehicle adoption and stationary energy storage. supporting our expectation for 15% market growth through 2030. In electronics, we see attractive growth opportunities across a range of applications, including our fume silica used in CMP polishing slurries for the semiconductor industry, specialty carbons used in displays, and specialty carbons and compounds for other conductive applications. Additional growth is driven by electrical grid modernization and energy infrastructure investments used due to data center growth that support demand for our specialty carbons and compounds used in power distribution cables. Performance Chemicals has delivered strong EBIT growth over the last three years despite softness in some of our end markets. So while the market environment is not uniformly strong, our track record speaks to the strength of Cabot's broad range of products across Performance Chemicals and our global asset footprint that allows us to deliver volume growth aligned with these macro trends. With this business environment in mind, we expect fiscal 27 adjusted earnings per share to be in the range of $6.15 to $6.75. This range reflects a variety of potential outcomes in what remains a dynamic environment. The range contemplates various demand scenarios, as well as a range of potential outcomes for our calendar year 2027 customer agreements and reinforcement materials, which are still being actively negotiated. We will remain focused on commercial execution, cost management, completing our restructuring and optimization actions, and ensuring disciplined capital allocation. Our outlook also assumes an operating tax rate of 28 to 30% and capital expenditures in a range of $200 to $230 million. Our investment plans include spending to maintain our existing operations along with targeted growth investments. We expect to generate favorable free cash flow supporting both our strategic investments and the return of cash to shareholders. So while fiscal 2027 is expected to remain a mixed business environment, we remain confident in our ability to manage through the environment by focusing on the factors within our control, capturing growth where we see it, and maintaining our financial discipline. With that outlook in mind, let me turn to our priorities for fiscal 2027. First, we're focused on growing with key customers in attractive end markets. We're working closely with reinforcement materials customers to meet their demand needs around the world with strong quality, reliable supply, and a broad product offering. We continue to see growth opportunities in battery materials, conductive and electronic applications, where our differentiated product and technical capabilities position us to participate in long-term demand growth. Our focus is on translating these opportunities into sustained volume growth across the portfolio. Second, we'll continue to focus on ways to strengthen our competitiveness. Our commercial excellence and operational excellence programs remain central to how we run the business. We will continue to adapt to the changing business environment to drive strong performance. We are focused on completing our previously announced restructuring actions and other cost optimization activities and we believe that these are important steps to improve efficiency and strengthen our cost position. Third, we'll continue to advance our organic growth projects while remaining disciplined about where we invest. As I discussed earlier, we are investing in battery materials with additional conductive additive capacity with those investments expected to begin contributing in fiscal 2028. We will also continue investing in process technology enhancements to enhance our competitiveness in reinforcement materials. Finally, we'll pursue inorganic opportunities that, one, strengthen our competitive position and complement our portfolio, two, drive growth, and three, provide attractive economic returns in a three- to five-year timeframe. We'll look for opportunities to increase scale, geographic access, and participation across our carbon black and silica franchises. and we will also target adjacent materials and technology investments in high growth areas. These areas include batteries, conductive and electronic materials. We'll evaluate any opportunities with the same financial discipline we apply to our organic investments while protecting our investment grade credit rating. Taken together, these priorities are about controlling what we can control in a dynamic business environment while continuing to invest in the areas that we believe will drive Cabot's longer term growth. We believe the balance of near-term execution, targeted investment, and disciplined capital deployment is the right approach as we enter fiscal 2027. So in conclusion, Cabot is well-positioned to deliver value for our shareholders. We have a very strong foundation that includes leading positions and materials that are critical to our customers' products, and we participate in high-growth applications that provide opportunity to expand the business and improve our product mix over time. We have a strong competitive cost position and a flexible global footprint that allows us to serve customers around the world and adapt as business conditions change. And our strong cash generation supported by our proven discipline around managing working capital and capital spending gives us the financial flexibility to invest through the cycle and enable Cabot to continue to grow, launch new products, and enhance our competitive position. We'll continue to balance those investments with returning cash to shareholders while maintaining an investment grade credit rating. So while the near-term environment remains dynamic, these strengths give me great confidence in Cabot's ability to continue to execute well, deliver strong financial performance, and strengthen our leadership positions. I'm excited about the opportunities we have to grow and create long-term value for our shareholders. Thank you again for joining us today. I'll now turn it over to Victor to open the floor for questions.

Thank you. To ask a question, you need to press star 1-1 on your telephone and wait for a name to be announced. To withdraw your question, please press star 1-1 again. Please stand by. We'll compile the Q&A roster. One moment for our first question. Our first question comes from David Bell-Geeter from Deutsche Bank. Your line is now open.

Good morning. This is Emily Fusco on for Dave Begleiter. How are Tire contract negotiations proceeding and maybe if you could give any color on expectations by region or any what percentage of negotiations have been settled just just any color there would be great thank you.

Sure hi Emily thanks for the question. So right now we're in the midst of our calendar year 27 tire customer negotiations. I'd say we've concluded about a third of those negotiations at this stage. We are, you know, I would say the outcomes right now vary on a case-by-case basis, and it's a bit premature to characterize final outcomes before the process is complete. So right now, the range that we've provided gives the best view of the progress and the outcomes we've seen to date, and of course, we provide fuller updates as the process concludes later in the year.

Got it. Thank you. Sure.

Thank you. Our next question will come from the line of Peter Osterlund from Truro Securities. Your line is open.

Good morning. This is Alec on for Pete. I was wondering how you see the current energy freight and logistics environment flowing through the P&L and is there anything to point out in regards to higher freight prices? Maybe keeping some tire imports incrementally out of some of the more freight-dependent markets. Thank you.

Yeah, so thanks, Alec, for the question. So I think, as you know, most of our reinforcement materials products stay within region. So the freight and logistics associated with moving products and reinforcement is largely just within region and properly, I'd say, contracted. So there's not too much impact we see from that. and then in our performance chemicals segment where we do move some of our specialty materials across regions also I'd say well negotiated contracts on the logistics and then pricing that we would use as a lever to counteract any increases and so we've successfully implemented price increases as we've moved through 2026 and performance chemicals as we've talked about before and that would be you know we'd see our margins holding very nicely in that in that segment. The impact of higher energy and feedstock cost is probably more predominant than the logistics and so these vary by segment as well so in reinforcement materials we generally have the pricing constructs to pass on higher feedstock and energy cost that helps protect the dollar margin profitability in that region and then we also have what we call our energy centers which produce steam or electricity and as energy prices rise that usually rises as well and so becomes more favorable for us. In performance chemicals the impact is also managed through pricing actions which we've taken this year as we see pricing increase and and we've you know while this can vary over time and by quarter We've been quite successful in protecting margins in our history and very disciplined in managing pricing and execution in that area. And so where you see the biggest impact, I would say then on the rise in energy is in our working capital balances. So as the input costs rise, so does the value of inventory and accounts receivable that work them way through. So in this environment, we have seen an increase in our networking capital balances that you can see in 2026. and we generally think of this as every dollar per barrel increase in a feedstock industry usually equates to about a six million dollar increase in the working capital balance on the balance sheet. Now this takes time over a few quarters as we implement pricing and that flows through the balance sheet but that's usually what we see and then if energy prices come down we see a release of that cash. Overall, I think our contractual structures and reinforcement materials and the pricing actions we take in performance chemicals, as well as the strong liquidity position we have, leave us very well positioned to manage the periods of higher energy and feedstock costs.

Thank you. One moment for our next question. Our next question comes from John Roberts from Mizuho Securities. Your line is open.

Hi, thanks for taking my question. This is Saurabh Deer for John Roberts. Congratulations on the new role, Erica, and good to see you back, Steve. I think the first question is, given the contract negotiations and the flat tire demand you're seeing right now, how should we think about the reinforcement segment earnings this year versus last year based on the midpoint of your guidance? And then how are you factoring in the The impact of lower tire imports into North America and Europe into your outlook?

Yeah, so what I'd say is, as I answered earlier, that we're in the midst of these negotiations now and try to provide the backdrop of the environment we're seeing. So as you said, the market conditions do remain challenging right now with low growth in tire production. there are some you know positive signs in terms of the imports into North America and Europe specifically but we've not seen the lower imports yet translate into higher production broadly I'd say in the western regions and so these are the business conditions with which we're doing the negotiations right now and so this is what informs the range we've provided in terms of adjusted EPS at the 615 to 675 earnings per share rate, which would take into account different outcomes as we continue to complete these negotiations. But as you're saying, the backdrop is challenging with the low growth and we're early in terms of finalizing negotiations. So I'd say we've provided our best view of the range of outcomes in the range we have given.

Got it. And just secondly, on the oil prices, what oil price are you embedding in your guidance? And can you help us understand the sensitivity to the earnings of a meaningfully lower oil price scenario?

Sure. So we usually use just the forward curve at the time that we're doing the forecast. So this is pretty elevated at the current price. And then usually the forward curve is relatively flat, to be honest, in most scenarios. As I talked about, the lower oil, really, we would reset pricing as the oil moves. And so from a profitability perspective, There should not be a meaningful impact to us because we will keep our margin per ton amount consistent. That's how we set up the pricing arrangements we have. What you do see, and you see it in this quarter, is the higher oil on a percent margin basis, you can see this in reinforcement materials, does impact the calculation. And so as the revenue goes up because the pricing goes up, but yet our profit per ton in dollars is meant to stay the same, you can see that percentage be impacted. So what you would see in a lower oil, while we protect the dollar margin, you'd see the percent margin increase. But that would be what you'd see on the P&L. And then what you'd see on the cash flow would really be a release of working capital come through over a few quarters as the The pricing for buying the inventory goes down based on the lower oil and then the receivables would also decrease based on us resetting pricing as oil comes down.

Thank you.

Sure.

Thank you. Our next question will come from Josh Spector from UBS. Your line is open.

Hi, it's Chris Perrella on for Josh. As I think about the outlook for performance chems next year, can you just walk through, I guess, your assumptions there and what's driving, I guess, the slowdown in the battery materials consumption, at least temporarily?

Sure. So, hi, Chris. How are you? I would say as we talked about with the battery materials I'd say 2027 is an important investment year for us and so we'll begin to incur costs associated with bringing that new capacity online which temper earnings for 2027 but then we would expect to see an increase in 2028 as that capacity enables our volumes to to grow again at a higher rate so I would just think about it sort of as 2027 setting up 2028 growth. In terms of the other performance chemicals growth areas that we highlighted, we would expect those to continue. So electronics applications, one of our fastest growing areas. I highlighted in my comments that one of the biggest opportunities is we sell fume silica that's used as an abrasive in the CMP polishing slurries for semiconductors. and we're leading supplier to the major slurry producers. So if you think about the underlying driver there, AI is driving the demand for advanced chips and more complex chip designs and there's more polishing steps that then go into this. So we expect this demand to be growing quite nicely and at mid to high single digit rate over the next several years. Beyond that application, we have materials that go into other electronic applications. for example we produce conductive compounds that protect electronic components and packaging from static discharge and that's growing nicely as well as specialty carbons that's used to improve image quality and electronic displays so overall our electronic portfolio plays really well into the strength of Cabot where we have high purity materials and particle engineering that goes into these types of applications that are growing nicely over time So overall, if you think of the conductive and electronic applications, we would expect growth in kind of the 6% to 8% range over the coming years. So this sets up performance chemicals nicely in 27 and beyond. But as I talked about in terms of the environment, there are applications within performance chemicals such as automotive that are still impacted by the economic outlook. And so those are a lower growth expectation for us.

All right, and then just a quick follow up. I know the China coal tar price has been elevated. Can you talk about the impact in the September quarter and sort of how that impacts the market, especially with Asia RM pricing and demand?

Yeah, so I'd say it's mainly a mix, you know, impact to us in terms of the Asia because, as you can see in the volumes that we reported for reinforcement materials in the fourth quarter, Asia was a large growth driver of an increase in volume. So as you think about that, the regional mix of those volumes versus volumes in western regions is less favorable. In terms of the pricing, the China market is a predominantly spot pricing market. So as coal tar prices move, we move prices pretty instantaneously with the market and the rest of the carbon black producers do the same. you know as coal tar moves around we increase or decrease pricing associated with that move and that's what we did in the fourth quarter.

Thank you.

Thank you. And our next question will come from the line of Lawrence Alexander from Jefferies. Your line is open.

Hi, this is Dan Rizawan. So just thinking about capacity CapEx for the next couple of years, you have $125 million capacity expansion in the U.S.-China for conductive additives. I'm sorry if I missed this, but is there other expansions besides that that I'm not remembering?

Those are the main expansions in terms of capacity, Dan. So we gave a range on CapEx of $200 to $230 million. for the year probably about half of that is maintenance capital about half of that would be growth capex and so you know I'd say a majority of that spend is for the battery materials investments we'll also have investments in technology advancements for reinforcement materials these are yield and other process technologies that really improve the cost position of reinforcement materials so there is some in that maybe about 10 million of growth in that and then we have a smattering of other smaller I call them profit adding projects that we do at specific plant locations also to improve competitiveness.

Okay and then with the plant in Mexico you know the deal with Bridgestone is Bridgestone is that plant completely sold out to Bridgestone or is there like additional capacity there that you could use for other other people or other customers? and secondly is there a take or pay component with that plant by Bridgestone?

So I'd say the Bridgestone agreement utilizes a significant portion of the capacity of that plant but not all of it so we have the ability to sell into the market additional capacity at that plant which is nice and then I'd say I can't give too many specifics on the long-term agreement with Bridgestone but we're quite confident in the and, you know, ability for us to execute that contract as planned in terms of Bridgestone taking the product we have agreed to.

Thank you very much.

Thank you. And our next question will come from the line of Jeff Zekowska from JP Morgan. Your line is open.

Hi, this is Lydia Huang. I'm for Jeff. Can you talk about volume dynamics for reinforcement in Europe? It seems like import levels have moderated. Are the volume declines customer specific or is it a general trend in the market?

I think so overall for tire production in Europe, I'd say it's a We have not seen much of an increase this year, even with tire imports declining. So it hasn't led to a robust tire production market. Our specific volumes being down, if you remember when we talked about the contract outcomes in the 2026 calendar year contract, we did note that we had lost share in those contract outcomes. So that's the main driver of why our volumes have been down in this past quarter and earlier this year.

Thank you. And so on China, it looks like Chinese carbon black prices surged and then roundtripped in September, but not fully roundtripped. Is it entirely driven by COTAR prices? And how are your margins in China today?

Yeah, so those changes, Lydia, would be driven by coal tar prices. So there was a spike in coal tar that drove the pricing up, and it's moderated somewhat, so it's come down. So I would say that's the main driver of why you see the pricing levels move. I wouldn't say there's a change, really, in the competitive environment in China. It remains pretty high competitive intensity, I would say. And so that, you know, has not Thank you.

Thank you. And this concludes the question and answer session. I want to turn it back over to Erica for closing remarks.

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