CBT 10-K & 10-Q changes, risk factors and insider trading

Our businesses are sensitive to industry capacity utilization, and pricing tends to fluctuate when capacity utilization changes occur, which could affectFurther, our financial performance. Further, we operate in a highly competitive marketplace. Our ability to compete successfully depends in part upon our ability to maintain a superior technological capability and to continue to identify, develop and commercialize new and innovative, high value-added products for existing and future customers. Increased competition from existing or newly developed products offered by our competitors or companies whose products offer similar functionality as our products, particularly those with an improved environmental footprint, that could be substituted for our products, may negatively affect demand for our products. In addition, actions by our competitors could impair our ability to maintain or raise prices, successfully enter new markets or maintain or grow our market position.

Our ongoing manufacturing operations are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to environmental matters, many of which provide for substantial monetary fines, civil and criminal sanctions and possible injunctive relief for violations. These include requirements to obtain and comply with various environmental-related and other permits for constructing new facilities and operating our existing facilities, as well as settlements with agencies regarding environmental matters and environmental requirements. These environmental regulatory requirements impose constraints on our operations and could threaten our competitive position. We have expended and will continue to expend considerable amounts to construct, maintain, operate, and improve our facilities around the world for environmental protection. In addition, thean increased emphasis on environmental justice, which is the fair treatment and meaningful involvement of all individuals and communities in which we operate, regardless of race, color, national origin, or income, with respect to the development, implementation and enforcement of environmental laws, regulations, and policies, could result in increased compliance requirements and costs. Furthermore, our actual or perceived failure to adhere to these principles could harm our reputation.

Further, environmental agencies worldwide are increasingly implementing regulations and other requirements resulting in more restrictive air emission limits globally, particularly as they relate to nitrogen oxides, sulfur dioxide and particulate matter emissions. We expect complying with existing regulations and other regulatory and tax changes being proposed in regions where we operate, if approved, will require us to incur significant additional costs for compliance, capital improvements or possibly limit our current or planned operations. We may not be able to offset the costs of these compliance obligations through price increases. Our ability to implement price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the segment served. Such increases may not be accepted by our customers, may not be sufficient to compensate for increased regulatory costs or may decrease demand for our products and our volume of sales. Further, the capital improvements needed to comply with environmental requirements frequently involvesinvolve the development and installation of new technologies within existing plant operations and there is a risk that these new technologies will not operate as we expect. In addition, as with construction projects generally, these projects may be delayed because of the availability of labor and materials or contractor performance issues and may have unexpected cost increases. There may be delays in the start-up of these capital improvements and ourwe abilitymay not be able to comply with theseenvironmental regulatory requirements in a timely manner. InWe particular,have it is possible we will experienceexperienced these issues at our plant in SarniaVille inPlatte. lightFurther, following our termination of the complexityconstruction contract for the design and installation of air pollution control equipment at Ville Platte as a result of the newcontractor’s technologypoor weperformance, expectthe tocontractor installhas atfiled thata plant.demand for arbitration against us in connection with our termination of the contract. Cabot has filed a counterclaim against the contractor seeking damages greater than the value of the contract on account of the contractor’s breaches of the contract.

A description of thesethe regulatory matters is included in the discussion under the heading “Safety, Health, Environment, and Sustainability” in Item 1 above, and in Note TS in Item 8 below under the heading “Contingencies”.

Carbon dioxide, a greenhouse gas, is emitted in carbon black manufacturing processes. Concerns about the relationship between greenhouse gases and global climate change, and an increased focus on carbon neutrality and net zero, may result in additional regulations on both national and supranational levels, to monitor, regulate, control and impose taxes on emissions of carbon dioxide and other greenhouse gases. Climate changes include extreme weather impacts, such as changes in rainfall and in storm patterns and intensities, water shortages, significantly changing sea levels and increasing atmospheric and water temperatures. A number of governmental bodies have introduced or are contemplating regulatory changes in response to climate change, including regulating greenhouse gas emissions. Specifically, in certain geographic areas, our carbon black facilities are or may become subject to greenhouse gas emission trading schemes or carbon tax programs under which we may be required to pay any incurred taxes or purchase emission credits if our emission levels exceed our free allocation. The outcome of new legislation or regulation in the U.S. and other jurisdictions in which we operate may result in new or additional requirements and fees or restrictions on certain activities. Compliance with greenhouse gas and climate change initiatives may result in additional costs to us, including, among other things, increased production costs, increased feedstock costs, additional taxes, reduced emission allowances or additional restrictions on production or operations. In addition, certain of our carbon black products for specialty applications have higher greenhouse gas emissions than our other products, which may increase our compliance costs and make it more challenging to achieve our emissions goals without technology developments. We may not be able to offset the effects of these new or more stringent laws and regulations and compliance costs through price increases, which could adversely affect our business and negatively impact our profitability and our growth. Our ability to implement price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the segment served. Such increases may not be accepted by our customers, may not be sufficient to compensate for increased regulatory costs or may decrease demand for our products and our volume of sales. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

In addition, even without increased regulation, increased public awareness and adverse publicity about potential impacts on climate change or environmental harm from us or our industry could harm our reputation or otherwise impact the Company adversely. In recent years, investors have also begun to show increased interest in sustainability and climate change as it relates to their investment decisions. Our failure to execute our sustainability strategy in a way that adequately responds to these environmental concerns in a timely manner could harm our reputation and negatively impact the perceived value of our securities. In addition, new disclosure requirements related to GHG emissions and climate change, including the European Sustainability Reporting Standards, any final rules approved by the SECStandards and upheld by the courts, andU.S. state laws requiring climate disclosure, may negatively impact our business by diverting resources, increasing our compliance costs and harming our reputation. Further, increasingmore frequent weather-related impacts on our operations and plant sites may impact the cost or availability of insurance.

Our manufacturing processes consume significant amounts of energy and raw materials, the costs of which are subject to worldwide supply and demand as well as other factors beyond our control. Our carbon black businesses use a variety of feedstocks as raw material including high sulfur fuel oils, low sulfur fuel oils, coal tar distillates, and ethylene cracker residue, the cost and availability of which vary, based in part on geography. Significant movements or volatility in our carbon black feedstock costs could have an adverse effect on our working capital and results of operations. In addition, regulatory changeschanges, tariffs, or geopolitical conflict may impact the availability and prices of our raw materials. For example, the Russian invasion of Ukraine and the resulting ongoing war has in the past disrupted and may in the future continue to disrupt the price and availability of natural gas in Europe.

Our success in strengthening relationships and growing business with our largest customers and retaining their business over extended time periods is important to our future results. We have a group of key customers across our businesses that together represent a significant portion of our total net sales and operating revenues. The loss of any of our important customers, or a significant reduction in volumes sold to them, could adversely affect our results of operations until such business is replaced or any temporary disruption ends. Further, in our Reinforcement Materials segment we enter into supply arrangements with a number of key customers that typically have a duration of one year, which account for approximately two-thirdssixty percent of our total reinforcing carbons volumes. Our success in negotiating the price and volume terms under these arrangements could havehas a material effect on our results. In addition, a number of our operations are conducted through joint venture arrangements that operate pursuant to long-term contracts, including for the supply of raw materials and the provision of other services for the joint venture operations. Any dispute as to the terms of these contractual arrangements or deterioration in the relationship between us and our joint venture partnerpartner, or the disruption or curtailment of a joint venture partner’s operations, could disrupt the operations of the joint venture, which could affect our financial results and harm our reputation. In addition, any deterioration in the financial condition of any of our customers that impairs our customers’ ability to make payments to us also could increase our uncollectible receivables and could affect our future results and financial condition.

Sales outside of the U.S. constituted the majority of our revenues in fiscal 2024.2025. We conduct business in several countries, including China, that have less stabledeveloped legal systems and financial markets, and potentially more corrupt, or less predictable,predictable business environments than the U.S. As set forth in Note VU to our Consolidated Financial Statements, sales in China constituted approximately 25% of our revenues in fiscal 20242025 and our property, plant and equipment located in China constituted approximately 25%21% of our total property, plant and equipment as of September 30, 2024.2025. Our operations outside of the U.S., including in China, expose us to risks related to uncertain enforcement of laws by foreign governments as well as risks that foreign governmental entities will change applicable rules and regulations with minimal advance notice. These risks could result in a material change in our operations, which could negatively impact the value of our securities. Additionally, our operations in some countries, including China, are subject to thevarious followingrisks, risks:including changes in the rate of economic growth; unsettled political or economic conditions; non-renewalabrupt ofchanges operatingin permits or licensesregulation; possible expropriation or other governmental actions; corruption by government officials and other third parties; social unrest, war, terrorist activities or other armed conflict; confiscatory taxation or other adverse tax policies; deprivation of contract rights; trade regulations affecting production, pricing and marketing of products; reduced protection of intellectual property rights; restrictions or additional costs associated with repatriating cash; exchange controls; inflation; currency fluctuations and devaluation; political tension that could result in sanctions being imposed against our customers or suppliers in countries where sanctions have not been imposed in the past; the effect of global health, safety and environmental matters on economic conditions and market opportunities; and changes in financial policy and availability of credit.

At certain of our fumed metal oxides facilities, we have fence-line arrangements (many of which are closed-loop) with adjacent third-party manufacturing operations (“fence-line partners”), who provide raw materials for our manufacturing operations and/or take by-products generated from our operations. Accordingly, any disruptions or curtailments in a fence-line partner’s production facilities that impacts their ability to supply us with raw materials or to take our manufacturing by-products could disrupt our manufacturing operations or cause us to incur increased operating costs to mitigate such disruption. We have experienced disruptions in the supply of raw materials from certain of our fence-line partners in recent years, which have caused us to curtail our operations or incur higher operating costs. Recently, in July 2025, Dow, our fence-line partner at our fumed metal oxides facility in Barry, Wales, announced that it would be ceasing its polysiloxane operations at their site by mid-calendar year 2026. Dow currently supplies our operations with chlorosilane feedstock, which we convert into fumed silica, under an agreement with a term through the end of calendar year 2028. We are engaged in discussions with Dow as to how it will satisfy its performance obligations to us; however, when our agreement with Dow ceases we may be forced to limit our manufacturing operations at our Barry site, which could decrease the site’s profitability and increase our costs. In addition, we operate certain of our carbon black facilities through joint venture arrangements, pursuant to which our joint venture partners provide feedstock and/or take by-products generated from our operations. A dispute with a joint venture partner concerning the terms of those arrangements could impact our joint venture operations and could decrease our income from such operations. For example, we arewere currentlyrecently in arbitration following an on-goinga dispute with our joint venture partner in the Czech Republic, which has, and continuesalthough to,we were successful on the merits of the arbitration, while the dispute was on-going, it negatively impactimpacted those operations and reduce our income from those joint venture operations. Further, significant events at neighboring industrial facilities, such as environmental releases, could also disrupt our operations and result in negative publicity about us and harm our reputation.

The secure processing, maintenance and transmission of this data isare critical to our operations and business strategy. InformationFailures in our information technology systems failures,systems, including those associated withinvolving our managed service providerprovider, orcould relateddisrupt toour business. Challenges may also arise when maintaining or upgrading our systemssystems, or when integrating information technology and other systems inas connection with the integrationpart of businessesbusiness weacquisitions. acquire, or networkSuch disruptions could disruptimpede our operationsability byto impeding our processing ofprocess transactions and affect our financial reporting,reporting. andAdditionally, these issues may impact on our operations, including bypotentially contributing to a process safety event,event. anyAny of whichthese couldscenarios may have a material adverse effect on our business or results of operations. In the past, our networks have been subject to an attack, potentially by suspected foreign nation-state attackers, who conducted reconnaissance and deployed malware. While our systems were able to isolate and expel the attacker before material harm was caused, criminals, rogue insiders, nation-state, and other attackers may continue to attack our network, and our defenses may be unable to succeed in detecting their actions or stop them from inflicting potentially material harms including by theft, destruction, misuse, or corruption of our data or systems or those of other entities whose systems may interconnect with ours.

In addition, our information technology systems could be compromised by outside parties intent on extracting information, corrupting information or disrupting business processes. Despite our security design and controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, inadvertent or intentional employee actions, system failures and other risks that could potentially lead to the compromising of sensitive, confidential or personal data, improper use of our, or our third-party provider systems, solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, or operational disruptions. We face increased information technology security and fraud risks due to our increased reliance on working remotely, which may create additional information security vulnerabilities and/or magnify the impact of any disruption in information technology systems. Additionally, as we increase our use of artificial intelligence tools into our operations, the risk of unauthorized access to our data and of making compliance errors or erroneous decisions based on our reliance on the AI tool will increase. We have in the past and may in the future be exposed to unauthorized access to our information technology systems through undetected vulnerabilities in our or our service providers’ information systems or software. With the evolving nature of cybersecurity threats, the scope and impact of any information security incident cannot be predicted. In addition, more than a dozen states in the United States have also passed comprehensive data protection legislation, and the global regulatory environment pertaining to information security and privacy is increasingly demanding, with new and changing requirements, such as the European Union’s General Data Protection Regulation, The Personal Information Protection Law of the People’s Republic of China, and Brazil’s Lei Geral de Protecao de Dados. Complying with these laws and regulations may be more costly or take longer than we anticipate, and any failure to comply could result in fines or penalties.

Breaches of our security measures, cyber incidents and disruptions, use of AI tools, the theft or accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential information about the Company, our employees, our vendors, or our customers, or failure to comply with laws and regulations related to information security or privacy, could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or result in legal claims or proceedings against us by governmental entities or individuals, significant fines, penalties and judgments, disruption of our operations, remediation requirements, changes to our business practices, and damage to our reputation, and could otherwise harm our business and our results of operations. TheIn devotionthe case of additionala catastrophic cyber event, dedicating considerable resources to the restoration and security of our information technology systems may result in increased operational expenses and significant interruptions to business continuity, with the futurepotential couldfor significantly increase the cost of doing business or otherwise adversely impact ournegative financial results.consequences.

We have experienced recent disruptions of the type described above. For example, the severe flooding that occurred in Western Europe in July 2021 caused significant damage to our specialty compounds plant in Pepinster, Belgium. That disruption resulted in a near-term reduction in earnings from lower volumes and certain increases in our operating costs. We also experienced severe weather events in fiscal 2024 that negatively impacted the results of our Reinforcement Materials segment. Specifically, drought conditions in Mexico affected our operations and flooding conditions in Brazil affected our customers. In 2025, the typhoon in China caused property damage to our plant in Zhuhai.

Our operations and performance are affected by worldwide and regional economic conditions.conditions and global trade relations. Uncertainty or a deterioration in the economic conditions affecting the businesses to which, or geographic areas in which, we sell products could reduce demand for our products, while inflationary pressures may increase our costs. We may also experience pricing pressure on products and services, or be unsuccessful in passing along to our customers an increase in our raw materials costs or energy prices, which could decrease our revenues and have an adverse effect on our financial condition and cash flows. In addition, during periods of economic uncertainty, our customers may temporarily pursue inventory reduction (“destocking”) measures that exceed declines in the actual underlying demand. Given our position in the value chains for our principal products, we typically experience greater destocking impacts in our results of operations early in a recessionary cycle. Further, uncertainty created by volatile global trade and tariff policies may reduce demand for our products, negatively impact supply chain arrangements and inventory planning, and reduce our volumes and profitability.

Our operations in the EU are material to our business and important to our customers. If the competitiveness of chemical manufacturing in the EU continues to deteriorate in light of factors such as increased environmental compliance costs, prolonged high energy costs, inconsistent economic policies and rigid labor practices, our customers may have difficulty maintaining the competitiveness of their operations in this region or lose meaningful market share to lower cost imports from other regions, particularly Asia. For example, a shift in tire production from a higher cost region (such as the EU) to a lower cost region (such as Asia) could increase the export of tires made in Asia for sales into Europe and could result in a reduction in tire production in the EU and reduce our profitability.

In addition, changes in, or tensions relating to, U.S. trade relations with countries where we do business may adversely impact our business. For example, tensions in the U.S.-China trade relationship have led to an increased risk of sanctions being imposed against our suppliers and customers in China which, if imposed, could restrict our ability to do business with such companies. In addition, we may encounter unexpected operating difficulties in China, more restrictive investment opportunities in China, customers switching to non-U.S.-source products, greater difficulty transferring funds, more restrictive travel in and out of China, or negative currency impacts. Further, trade tariffs imposed by the U.S. on imports from China could increase the cost of our capital projects or have a negative impact on our customers and reduce demand for our products. In addition, escalating tensions in the U.S.-China trade relationship and/or actual or potential additional restrictive policies by either country could requirecause us to duplicateduplicate, to the extent permitted under applicable law, the technology or other resources and capabilities we have in China, in a geography outside China, thereby increasing our costs.

As more fully described in Note TS in Item 8 below under the heading “Contingencies”, we are a party to or the subject of lawsuits, claims, and proceedings, including, but not limited to, those involving environmental, and health and safety matters as well as product liability and personal injury claims relating to asbestosis, silicosis, and coal worker’s pneumoconiosis. We are also a potentially responsible party in various environmental proceedings and remediation matters wherein substantial amounts are at issue. Adverse rulings, judgments or settlements in pending or future litigation (including liabilities associated with respirator claims) or in connection with environmental remediation activities could adversely affect our financial results or cause our results to differ materially from those expressed or forecasted in any forward-looking statements.

Our future tax rates may be adversely affected by a number of factors, including: changes in the jurisdictions in which our profits are determined to be earned and taxed; changes in the estimated realization of our net deferred tax assets; the repatriation of non-U.S. earnings for which we have not previously accrued for non-U.S. withholding taxes; adjustments to estimated taxes upon finalization of various tax returns; increases in expenses that are not deductible for tax purposes; changes in available tax credits; the resolution of issues arising from tax audits with various tax authorities; and changes in tax laws including Pillar Two legislation adopted as part of the OECD Inclusion Framework, which established a global minimum corporate tax rate of 15% for certain multinational enterprises,enterprises and the U.S. federal government enacted One Big Beautiful Bill Act or the interpretation of such tax laws. In addition, losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from one quarter to another.

We earn revenues, pay expenses, own assetsassets, and incur liabilities in countries using currencies other than the U.S. dollar. In fiscal 2024,2025, we derived a majority of our revenues from sales outside the U.S. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other currencies in countries where we operate will affect our results of operations and the value of balance sheet items denominated in foreign currencies. For example, in botheach of the last three fiscal 2023 and 2024,years, we recorded foreign exchange losses related to the remeasurement of our net monetary assets denominated in Argentine pesos, as the official Argentine exchange rate weakened compared to the U.S. dollar throughout the year. In addition, we may have foreign currency losses from government-controlled currency devaluations, such as the foreign currency losses we recorded in both fiscal 2023 and 2024 related to the impact of the sharp devaluation of the Argentine peso that was guided by the Argentine central bank. Due to the geographic diversity of our operations, weaknesses in some currencies might be offset by strengths in others over time. In addition, we are exposed to adverse changes in interest rates. We use a combination of commercial paper and borrowings under our Credit Agreements to meet our short-term cash needs, with borrowings intra-quarter that may be higher than at quarter-end. As this debt is at variable interest rates, changes in interest rates can impact our borrowing costs. We manage both these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments as well as foreign currency debt. We cannot be certain, however, that we will be successful in reducing the risks inherent in exposures to foreign currency and interest rate fluctuations.

We have entered into a number of derivative contracts with financial counterparties. The effectiveness of these contracts is dependent on the ability of these financial counterparties to perform their obligations, and their nonperformance could harm our financial condition. In addition, at maturity, settlement of the derivative contract may be a use of cash depending on the movement of foreign exchange rates, the amount of which is unpredictable.

We have entered into forward foreign currency contracts and cross-currency swaps as part of our financial risk management strategy. The effectiveness of our risk management program using these instruments is dependent, in part, upon the counterparties to these contracts honoring their financial obligations. If any of our counterparties are unable to perform their obligations in the future, we could be exposed to increased earnings and cash flow volatility due to an instrument’s failure to hedge or adequately address a financial risk. In addition, the settlement of any derivative contracts could, depending on movements in the exchange rates, result in a cash outflow at maturity in an amount that is not predictable.

We may not be successful in achieving our growth expectations from developing new products or product applications. Moreover, we cannot be certain that the costs we incur investing in new product and technology development will result in an increase in revenues or profits commensurate with our investment or within the time period we expect. For example, our investments to further develop our E2C® solutions,composites, inkjet dispersions and inks, and battery materials applications may not result in the earnings growth expectations on which these investments are being made. Further, we attempt to pace our strategic investments, including those we are making to develop our battery materials business in Europe and the U.S. to meet market expectations for the growth in demand for electric vehicles, but, as has been the case with the transition to electric vehicles, market demand for and acceptance of new products may not develop as we expect and we may not realize growth in line with our expectations at the time we mademake such investments. Similarly, we cannot be certain that the investments we are making in our EVOLVE® Sustainable Solutions technology platform to develop products for our customers using sustainable reinforcing carbons from renewable or recycled materials or using processes that result in lower GHG emissions will be successful, including within the time period our customers expect. In addition, the timely commercialization of products that we are developing may be disrupted or delayed by manufacturing or other technical difficulties, market acceptance or insufficient market size to support a new product, competitors’ new products launched in advance of our own, and difficulties in moving from the experimental stage to the production stage. These disruptions or delays could affect our future business results.

Irrespective of our proprietary intellectual property rights, we may be subject to claims that our products, processes or product uses infringe the intellectual property rights of others. These claims, even if they are without merit, could be expensive and time consumingtime-consuming to defend and if we were to lose such claims, we could be enjoined from selling our products or using our processes and/or be subject to damages, or be required to enter into licensing agreements requiring royalty payments and/or use restrictions. Licensing agreements may not be available to us, or if available, may not be available on acceptable terms.

Our ability to complete capacity expansions and site development projects as planned may be delayed or interrupted by the need to obtain environmental and other regulatory approvals, unexpected cost increases, availability of labor and materials, unforeseen hazards such as weather conditions, and other risks customarily associated with construction projects. These risks include the risk that existing plant operations are disrupted as well as the risk associated with delays in the start-up of operations using new technologies, which disruptions could make it difficult for us to meet our customercustomers’ needs. Moreover, in the case of capacity expansions, the cost of these activities could have a negative impact on the financial performance of the relevant business until capacity utilization at the particular facility is sufficient to absorb the incremental costs associated with expansion. In addition, our ability to expand capacity in emerging regions depends in part on economic and political conditions in these regions and, in some cases, on our ability to establish operations, construct additional manufacturing capacity or form strategic business alliances.

Our consolidated financial statements have been prepared in conformity with U.S. GAAP. This preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical to the financial statements if (i) the estimate is complex in nature or requires a high degree of judgment and if (ii) different estimates and assumptions were used, the results could have a material impact on the consolidated financial statements. On an ongoing basis, we evaluate our estimates and the application of our policies. We base our estimates on historical experience, current conditionsconditions, and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We believe the following critical accounting estimates are the most significant to understanding our consolidated financial statements.

We have established valuation allowances against a variety of deferred tax assets, including net operating loss carryforwards, capital loss carryforwards, foreign tax credits,credits and other income tax credits. We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable. This assessment is completed on a jurisdiction-by-jurisdiction basis and relies on the weight of all positive and negative evidence available. Cumulative pre-tax losses for a three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive pretax income in the future.

Refer to Note A and Note RQ of our Notes to the Consolidated Financial Statements for description of our policies related to income taxes.

We have recorded a significant reserve for respirator liability claims. Our current estimate of the cost of our share of pending and future respirator liability claims is based on facts and circumstances existing at this time, including the number and nature of the remaining claims. Developments that could affect our estimate include, but are not limited to, (i) significant changes in the number of future claims, (ii) changes in the rate of dismissals without payment of pending claims, (iii) significant changes in the average cost of resolving claims, including potential settlements of groups of claims, (iv) significant changes in the legal costs of defending these claims, (v) changes in the nature of claims received or changes in our assessment of the viability of these claims, (vi) trial and appellate outcomes, (vii) changes in the law and procedure applicable to these claims, (viii) the financial viability of the parties that contribute to the payment of respirator claims, (ix) exhaustion or changes in the recoverability of the insurance coverage maintained by certain of the parties that contribute to the settlement of respirator claims, or a change in the availability of the indemnity provided by a former owner of the business, (x) changes in the allocation of costs among the various parties paying legal and settlement costs, and (xi) a determination that the assumptions that were used to estimate our share of liability are no longer reasonable. We cannot determine the impact of these potential developments on our current estimate of our share of liability for these existing and future claims. Because reserves are limited to amounts that are probable and estimable as of a relevant measurement date, and there is inherent difficulty in projecting the impact of potential developments on our share of liability for these existing and future claims, it is reasonably possible that the liabilities for existing and future claims could change in the near term and that change could be material. Refer to Note A and Note TS of our Notes to the Consolidated Financial Statements for description of our policies related to contingencies.

Evaluating goodwill for impairment involves applying significant assumptions including discount rates and forecasted results for the applicable reporting unit, including earnings before interest and tax (“EBIT”), market multiples and growth rates. These assumptions are forward lookingforward-looking and could be affected by future economic and market conditions. We engage third-party valuation specialists as needed to develop the assumptions used in the calculation and the evaluation of goodwill balances. Refer to Note A and Note GF of our Notes to the Consolidated Financial Statements for a description of our policies related to goodwill.

Cabot is organized into two reportable segments: Reinforcement Materials and Performance Chemicals. The Company’s former Purification Solutions business was a separate reportable segment prior to divestiture in the second quarter of fiscal 2022. Cabot is also organized for operational purposes into three geographic regions: the Americas; EMEA; and Asia Pacific. The discussions of our results of operations for the periods presented reflect these structures.

Our analysis of financial condition and operating results should be read together with our consolidated financial statements and accompanying notes. Unless a calendar year is specified, all references to years in this discussion are to our fiscal years ended September 30.

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 excludes income tax (expense) benefit on certain items and discrete tax items. 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 yearyear-to-year on a consistent basis and to understand what our tax rate on current operations would be without the impact of these items.

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 expensesexpenses, such as certain corporate salaries and headquarterheadquarters 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.

Drivers of demand and key factors affecting our profitability differ by segment. In Reinforcement Materials, longer term demand is driven primarily by: i) the number of vehicle miles driven globally; ii) the number of original equipment and replacement tires produced; iii) the number of automotive builds; and iv) changes in supply chain inventory levels to adapt to end-market demand and other market dynamics.dynamics; v) demand for high-performance tires; vi) demand for larger tires and larger vehicles, such as trucks, buses, off-road vehicles used in agriculture, mining and similar vehicles; vii) demand for electric and hybrid vehicles; viii) consumer and industrial spending on new vehicles; and ix) changes in regulatory requirements impacting vehicle fuel efficiency and tire regulations. Over the past several years, operating results have been driven by a number of factors, including: i) increases or decreases in our sales volumes driven by changes in production levels for tires or industrial rubber productsproducts, and the region in which the production occurs, and the level at which we service that demand; ii) changes in raw material costs and our ability to adjust the sales price for our products commensurate with changes in raw material costs; iii) changes in pricing and product mix, which includes customer pricing as well as the mix of products sold or the region in which they are sold; iv) global and regional capacity utilization for carbon black; v) fixed cost savings achieved through restructuring and other cost saving activities; vi) the growth of our volumes and market position in emerging economies; vii) capacity management and technology investments, including the impact of energy utilization and yield improvement technologies at our manufacturing facilities; viii) royalties and technology payments related to our patented elastomer composites technology that is used in tire applications; and ix) changes in energy prices associated with our energy center sales and the cost of utilities.

In Performance Chemicals, longer term demand is driven primarily by the construction and infrastructure, automotive, including sales into batteries for electric vehicles, electronics, inkjet printing,printing and consumer products industries. In recent years, operating results in Performance Chemicals have been driven by: i) increases or decreases in sales volumes to the industries previously noted; ii) changes in pricing and product mix, which includes customer pricing as well as the mix of products sold or the region in which they are sold; iii) our ability to deliver differentiated products that drive enhanced performance in customers’ applications; iv) our ability to obtain value pricing for this differentiation; v) the cost of new capacity; vi) changes in selling prices relative to variations in the cost of raw materials; vii) the adoption of new products for use in our customers’ applications; and viii) changes in supply chain inventory levels to adapt to end-market demand and other market dynamics.

During fiscal 2024,2025, Income (loss) from operations before income taxes and equity in earnings of affiliated companies increased compared to fiscal 20232024 primarily due to higherlower earningslosses from government-controlled currency devaluations in bothArgentina and higher segment EBIT in our Performance Chemicals segment, partially offset by lower segment EBIT in our Reinforcement Materials and Performance Chemicals segments.segment.

Gross profit increaseddecreased by $121$20 million in fiscal 20242025 as compared to fiscal 2023.2024. The increasedecrease was primarily due to lower volumes in our Reinforcement Materials segment, partially offset by higher earningsvolumes in our Performance Chemicals segment and lower selling and administrative expenses in both our Reinforcement Materials and Performance Chemicals segments as volumes and unit margins, net of costs, in both segments improved.segments.

Selling and administrative expenses increaseddecreased by $30$23 million in fiscal 20242025 as compared to fiscal 2023.2024. The increasedecrease was primarily due to ancost increasemanagement in the incentive compensation expense.efforts.

Research and technical expenses increaseddecreased by $6$4 million in fiscal 20242025 as compared to fiscal 2023.2024. The increasedecrease was primarily due to ancost increasemanagement in the incentive compensation expense.efforts.

Interest and dividend income in fiscal 20242025 increaseddecreased by $1$5 million as compared to fiscal 20232024 primarily due to higherlower interest ratesrates, andpartially theoffset currencyby mixhigher ofaverage deposit balances.

Interest expense decreased by $9$5 million in fiscal 20242025 as compared to fiscal 20232024 primarily due to lower averageinterest rates on short-term borrowings, partially offset by higher interestaverage rates.short-term borrowings.

Other expense increaseddecreased during fiscal 20242025 by $20$29 million as compared to fiscal 2023.2024. The increasedecrease was primarily due to higherlower foreign currency losses in Argentina, including the impact of the government devaluation of the currency that occurred during the first quarter of fiscal 2024.

Refer to the reconciliation of computed tax expense at the federal statutory rate to the Provision (benefit) for income taxes in Note RQ of our Notes to the Consolidated Financial Statements.

For the year ended September 30, 2024,2025, the (Provision) benefit for income taxes was a $111$196 million expense compared to a $28$111 million benefitexpense for fiscal 2023.2024. Included in the (provision) benefit for income taxes for the year ended September 30, 2024 and 20232025 is a tax expense of $31 million compared to a tax benefit of $24 million andfor $152fiscal million, respectively,2024, related to a partial valuation allowance releaseadjustment on the Company’sour U.S. net deferred tax assets.assets in each year. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate,operate and the presence of valuation allowances in certain tax jurisdictions.

For fiscal 2025,2026, we expect our 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 expensesexpenses, 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, net of tax, increased by $5$1 million in fiscal 20242025 compared to fiscal 20232024 primarily due to increasehigher earningsprofitability of our several joint ventures in China and the Czech Republic.China.

In fiscal 20242025 and 2023,2024, we reported net income attributable to Cabot Corporation of $380$331 million ($6.72$6.02 earnings per diluted common share) and $445$380 million ($7.73$6.72 earnings per diluted common share), respectively. The decrease in fiscal 20242025 was primarily due to a lowerhigher provision for income taxes ($85 million) driven by an increase in the partial release of the valuation allowance recorded on our U.S. deferred tax assetsassets, and lower segment EBIT in Reinforcement Materials ($128$29 million), andpartially higheroffset by lower losses from government-controlled currency devaluations in Argentina ($26$43 million), partially offset byand higher earningssegment EBIT in both our Reinforcement Material and Performance Chemicals segments ($94$30 million combined).

Income (loss) from operations before income taxes and equity in earnings of affiliated companies, pre-tax certain items, other unallocated items and Total segment EBIT for fiscal 20242025 and 20232024 are set forth in the table below. The details of certain items and other unallocated items are shown below and in Note VU of our Notes to the Consolidated Financial Statements.

In fiscal 2024,2025, sales in PerformanceReinforcement ChemicalsMaterials increaseddecreased by $25$269 million compared to the same period of fiscal 2023.2024. The increasedecrease was drivenprimarily bydue higherto lower volumes ($69$125 million), partiallyand offsetless by unfavorablefavorable pricing and product mix ($36 million) and the unfavorable impact from foreign currency translation ($5$127 million). The higherlower volumes were primarily due to demand recovery in key end markets as thelower customer destockingdemand thatdriven occurredby inuncertainty fiscalfrom 2023tariffs didand nota reoccurweaker inglobal fiscalmacroeconomic 2024.Theenvironment. The less favorable pricing wasand product mix were primarily duedriven toby lower raw material costs thatwhich, in most instances, are generally passed through to our customers.customers through formulas and other market-based adjustments.

EBIT in PerformanceReinforcement ChemicalsMaterials increaseddecreased by $39$29 million compared to fiscal 20232024. dueThe todecrease higherwas driven by lower volumes ($35 million) and higher unit margins, net of higher costs ($11$51 million), partially offset by lower selling and administrative expenses ($15 million) and the unfavorablefavorable impact offrom foreign currency translation ($6$7 million). The higherlower volumes were primarily due to demand recovery in key end markets as thelower customer destockingdemand thatdriven occurredby inuncertainty fiscalfrom 2023tariffs didand nota reoccurweaker inglobal fiscalmacroeconomic 2024.environment. The higherlower unitselling margins,and netadministrative of higher costs,expenses were primarily due to highercost unit margins from a more favorable product mix with higher sales into the automotivemanagement and electronicsoptimization end markets. Higher costs were primarily driven by higher maintenance and turnaround costs.efforts.

Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, increased by $137$75 million during fiscal 2024,2025, primarily due to a higher cash balance and lower outstanding revolving credit and commercial paper balances at the end of the period. As of September 30, 2024,2025, we had cash and cash equivalents of $223$258 million and borrowing availability under our revolving credit agreements of $1.2 billion.

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.

Cash provided by operating activities, which consists of net income adjusted for the various non-cash items included in income, changes in working capitalcapital, and changes in certain other balance sheet accounts, totaled $692$665 million in fiscal 2024.2025. Operating activities provided $595$692 million of cash in fiscal 2023.2024.

Investing activities consumed $235$298 million of cash in fiscal 20242025 compared to $214$235 million in fiscal 2023.2024. In fiscal 2024,2025, the use of cash by investing activities primarily consisted of $241$274 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital,capital. includingIn capacityaddition, expansionin projects.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.

In fiscal 2023,2024, the use of cash by investing activities primarily consisted of $244$241 million of capital expenditures for sustaining and compliance capital projects at our operating facilities as well as growth-related capital, including a capacity expansion project in Performance Chemicals, partially offset by proceeds from insurance settlements of $12 million, proceeds from the sale of land of $7 million, and proceeds from the sale of our Purification Solutions business of $6 million.projects.

During the secondthird quarter of fiscal 2026, Income (loss) before income taxes and equity in earnings of affiliated companies decreased as compared to the secondthird quarter of fiscal 2025. The decrease was primarily due to higher expenses related to restructuring activities, lower segmentSegment EBIT in our Reinforcement Materials segment, and a settlement charge for the termination of two pension plans in the U.K., partially offset by higher segmentSegment EBIT in our Performance Chemicals segment.

SecondThird quarter of Fiscal 2026 versus SecondThird quarter of Fiscal 2025—Consolidated

For the three and sixnine months ended MarchJune 31,30, 2026, Net sales and other operating revenue decreasedincreased by $32$59 million and $138decreased $79 million, respectively, compared to the same periods of fiscal 2025.

The decreaseincrease in GrossNet profitsales and other operating revenue in the secondthird quarter of fiscal 2026 as compared to the same period of fiscal 2025 was driven primarily by lower gross profit per ton in our Reinforcement Materials segment ($53 million), partially offset by higher volumes in both our Reinforcement Materials and Performance Chemicals segments ($13$51 million combined) and higher gross profit per ton in our Performance Chemicals segment ($5 million). The lower gross profit per ton in our Reinforcement Materials segment was primarily driven by less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes in our Reinforcement Materials segment were primarily drivendue byto higher demandincreases in Asia Pacific and EMEAthe andAmericas, increasedincluding saleshigher volumevolumes from our acquisitioncapacity of MXCB that closedaddition in theIndonesia secondand quarterour ofacquisition fiscalin 2026.Mexico. The higher volumes in our Performance Chemicals segment were primarily drivendue byto higher volumesdemand in our battery materials and specialtyfumed carbonsmetal oxides product lineslines. fromThe increase in battery materials volumes was driven by higher demand.demand for electric vehicles and battery energy storage systems and our strengthening participation with market-leading global battery manufacturers. The higher gross profit per tonincrease in ourfumed Performancemetal Chemicalsoxides segmentvolumes was primarilydriven dueby togrowth ain moreelectronics favorable product mix and optimization efforts.applications.

The decrease in GrossNet profitsales and other operating revenue in the first sixnine months of fiscal 2026 as compared to the same period of fiscal 2025 was driven primarily by lower gross profit per ton in our Reinforcement Materials segment ($65 million) and lower volumes in both our Reinforcement Materials and Performance Chemicals segments ($13 million combined), partially offset by higher gross profit per ton in our Performance Chemicals segment ($16 million). The lower gross profit per ton in our Reinforcement Materials segment was primarily driven by less favorable pricing and product mix in our Reinforcement Materials segment ($173 million), partially offset by the favorable impact from foreign currency translation in both our Reinforcement Materials and Performance Chemicals segments ($77 million combined) and higher volumes in both our Reinforcement Materials and Performance Chemicals segments ($20 million combined). The less favorable pricing and product mix in our Reinforcement Materials segment was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreementsagreements, lower raw materials costs, which are generally passed through to our customers, and lower pricing from increased competitive intensity in Asia Pacific. The lowerhigher volumes in our Reinforcement Materials segment were primarily due to lower volumes in the Americas and Asia Pacific. Volumes in our Reinforcement Materials segment were impacted by lower production levels at our tire customers and year-end inventory management in our first fiscal quarter by our customers in the Americas and increased competitive intensityincreases in Asia Pacific.Pacific, including increased sales volume from our capacity addition in Indonesia and acquisition in Mexico. The lowerhigher volumes in our Performance Chemicals segment were primarily due to weakerhigher demand in Europe.our battery materials product line. The higher gross profit per tonincrease in ourbattery Performancematerials Chemicals segmentvolumes was primarily driven by ahigher favorabledemand productfor mixelectric vehicles and frombattery lowerenergy spendingstorage from overall cost management effortssystems and optimizationour measuresstrengthening acrossparticipation thewith segment.market-leading global battery manufacturers.

Selling and administrative expenses increased by $3$11 million and $6$17 million, respectively, for the three and sixnine months ended MarchJune 31,30, 2026,2026 compared to the same periods of fiscal 2025. The higher selling and administrative expenses for the three and nine months ended MarchJune 31,30, 2026 compared to the same period of fiscal 2025 was primarily due to an increase in the valuation of deferred compensation expense and the higher selling and administrative expenses in the six months ended March 31, 2026 compared to the same period of fiscal 2025 waswere primarily due to higher legal and digital expenses.

Research and technical expenses decreased by $1$2 million and $2$4 million, respectively, for the three and sixnine months ended MarchJune 31,30, 2026 compared to the same periods of fiscal 2025 primarily due to cost management efforts.

Interest and dividend income was unchanged and increased by $1 million and $2 million, respectively, for the three and sixnine months ended MarchJune 31,30, 2026 compared to the same periods of fiscal 2025. The $1 million increase was2025 primarily due to higher average cash balances,balances partiallyand offset by lower averagehigher interest rates.rates on cash and investments in South America.

For the secondthird quarter of fiscal 2026, the (Provision) benefit for income taxes was a provision of $44$46 million compared to a provision of $49$43 million for the same period in fiscal 2025,2025 with the change primarily due to lower earnings andearnings, change in the mix of earnings.earnings and a net discrete tax expense of $19 million primarily related to changes in valuation allowance as a result of ceasing carbon black production at our plant in Campana, Argentina. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate,operate and by the presence of valuation allowances in certain tax jurisdictions.

For the sixnine months ended MarchJune 31,30, 2026, the (Provision) benefit for income taxes was a provision of $81$127 million compared to a provision of $90$133 million for the same period in fiscal 2025,2025 with the change primarily due to lower earnings andearnings, change in the mix of earnings.earnings, a net discrete tax expense of $30 million primarily related to changes in valuation allowance as a result of ceasing carbon black production at our plant in Campana, Argentina and withholding taxes on dividend distribution from our China subsidiary. Our income taxes are affected by the mix of earnings in the tax jurisdictions in which we operate,operate and by the presence of valuation allowances in certain tax jurisdictions.

Equity in earnings of affiliated companies, net of tax, decreasedincreased by $1 million and was unchanged for both the three and sixnine months ended MarchJune 31,30, 20262026, respectively, compared to the same periods of fiscal 2025,2025. The increase for the three months ended June 30, 2026 compared to the same period of fiscal 2025 was primarily due to lowerhigher profitability of our equity affiliate in Venezuela.

Net income (loss) attributable to noncontrolling interests, net of tax, decreased by $1$4 million and $3$7 million, respectivelyrespectively, for the three and sixnine months ended MarchJune 31,30, 2026 compared to the same periods of fiscal 2025 primarily due to lower profitability of our joint venture in the Czech Republic.

In the secondthird quarter of fiscal 2026 and 2025, we reported Net income (loss) attributable to Cabot Corporation of $68$6 million ($1.27$0.12 per diluted common share) and $94$101 million ($1.69$1.86 per diluted common share), respectively. The lower Net income in the secondthird quarter of fiscal 2026 compared with the same period in fiscal 2025 was primarily due to higher expenses related to restructuring activities ($39 million), lower segment EBIT in our Reinforcement Materials segment ($38$31 million), and a settlement charge for the termination of two pension plans in the U.K. ($29 million) partially offset by higher Segment EBIT in our Performance Chemicals segment ($9$11 million).

In the first sixnine months of fiscal 2026 and 2025, we reported Net income (loss) attributable to Cabot Corporation of $141$147 million ($2.64$2.77 per diluted common share) and $187$288 million ($3.36$5.22 per diluted common share), respectively. The lower Net income in the first sixnine months of fiscal 2026 compared with the same period in fiscal 2025 was primarily due to lower segment EBIT in our Reinforcement Materials segment ($66$97 million), higher expenses related to restructuring activities ($51 million) and a settlement charge for the termination of two pension plans in the U.K. ($29 million) partially offset by higher segment EBIT in our Performance Chemicals segment ($12$23 million).

SecondThird quarter of Fiscal 2026 versus SecondThird quarter of Fiscal 2025—By Business Segment

Sales and EBIT for Reinforcement Materials for the secondthird quarter of fiscal 2026 and 2025 were as follows:

Sales in Reinforcement Materials decreasedincreased by $50$26 million in the secondthird quarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to less favorable pricing and product mix ($95 million), partially offset by higher volumes ($21$33 million) and the favorable impact from foreign currency translation ($28$12 million). Thepartially offset by less favorable pricing and product mix was($20 driven by lower raw material costs which are generally passed through to our customers, less favorable pricing and product mix in our 2026 calendar year customer agreements and lower pricing from increased competitive intensity in Asia Pacific.million). The higher volumes were primarily due to higher demand in Asia Pacific and EMEAthe andAmericas, increasedincluding saleshigher volumevolumes from our acquisitioncapacity of MXCB that closedaddition in theIndonesia secondand quarterour ofacquisition fiscalin 2026.Mexico. The less favorable pricing and product mix was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreements.

EBITSales in Reinforcement Materials decreased by $115 million in the secondfirst quarternine months of fiscal 2026 decreased by $38 million compared to the same period of fiscal 2025. The decrease in EBIT was2025 primarily drivendue byto lowerless grossfavorable profitpricing perand tonproduct mix ($53$173 million), partially offset by the favorable impact from foreign currency translation ($50 million) and higher volumes ($9$12 million). The lowerless grossfavorable profitpricing perand tonproduct mix was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreementsagreements, lower raw materials costs which are generally passed through to our customers and lower pricing from increased competitive intensity in Asia Pacific. The higher volumes were primarily due to higher demand in Asia PacificPacific, and EMEA andincluding increased sales volume from our acquisitioncapacity of MXCB that closedaddition in theIndonesia secondand quarterour ofacquisition fiscalin 2026.Mexico.

EBIT in Reinforcement Materials decreased by $66 million in the firstthird six monthsquarter of fiscal 2026 decreased by $31 million compared to the same period of fiscal 2025. The decrease in EBIT was primarily driven by lower gross profit per ton ($65$40 million) and lowerhigher volumesselling and administrative expenses ($8$4 million), partially offset by thehigher favorable impact of foreign currency translationvolumes ($6$14 million). The lower gross profit per ton was primarily due to less favorable pricing and product mix in our 2026 calendar year customer agreements and lowerthe pricinghigher fromselling increasedand competitiveadministrative intensityexpenses inwere Asiaprimarily Pacific.due to higher legal expenses. The lowerhigher volumes were primarily due to lowerhigher volumes in the Americas and Asia. Volumes were impacted by lower production levels at our tire customers and year-end inventory management in the first fiscal quarter by our customers in the Americas and increased competitive intensitydemand in Asia Pacific.Pacific and the Americas, including higher volumes from our capacity addition in Indonesia and our acquisition in Mexico.

As we look to the thirdfourth quarter of the fiscal year, we expect the Reinforcement Materials segment EBIT to improvemodestly decline sequentially from the secondthird quarter of fiscal 2026 primarily due to higherlower grossexpected profitseasonal pervolume tonand from a more favorable productregional mix and yield improvements and a full fiscal quarter of operations from our acquisition of MXCB that closed in the second quarter of fiscal 2026.impacts.

Sales and EBIT for Performance Chemicals for the secondthird quarter of fiscal 2026 and 2025 were as follows:

Sales in Performance Chemicals increased by $6$31 million in the firstthird six monthsquarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to the higher volumes ($18 million), the favorable impact from foreign currency translation ($20 million), partially offset by lower volumes ($8$7 million) and lessmore favorable pricing and product mix ($5 million). The lowerhigher volumes were primarily due to lowerhigher volumesdemand in our battery materials and fumed metal oxides product linelines. fromThe lowerincrease in battery materials volumes was driven by higher demand for electric vehicles and thebattery lessenergy storage systems and our strengthening participation with market-leading global battery manufacturers. The increase in fumed metal oxides volumes was driven by growth in electronics applications. The more favorable pricing and product mix was primarily due to lowerprice rawincreases implemented ahead of rising material costs which, in certain instances, are passed through to our customers through formulas and othera market-basedfavorable adjustments.product mix.

EBITSales in Performance Chemicals increased by $9$37 million in the secondfirst quarternine months of fiscal 2026 compared to the same period of fiscal 2025 primarily due to higherthe grossfavorable profitimpact perfrom tonforeign currency translation ($5$27 million) and from higher volumes ($4$8 million). The higher gross profit per ton was primarily driven by a more favorable product mix and optimization efforts. The higher volumes were primarily due to higher volumesdemand in our battery materials and specialty carbons product linesline fromdriven by higher demand.demand for electric vehicles and battery energy storage systems and our strengthening participation with market-leading global battery manufacturers.

EBIT in Performance Chemicals increased by $12$11 million in the firstthird six monthsquarter of fiscal 2026 compared to the same period of fiscal 2025 primarily due to ahigher volumes ($8 million) and higher gross profit per ton ($16 million), partially offset by lower volumes ($5$3 million). The higher volumes were primarily due to higher demand in our battery materials and fumed metal oxides product lines. The higher gross profit per ton was primarily drivendue byto price increases implemented ahead of rising material costs and a more favorable product mix and from lower spending from overall cost management efforts and optimization measures across the segment. The lower volumes in our Performancespecialty Chemicalscarbons segmentproduct were primarily due to weaker demand in Europe.line.

As we look to the thirdfourth quarter of the fiscal year, we expect the Performance Chemicals segment EBIT to be relatively flatdecline sequentially from the secondthird quarter of fiscal 2026 ondue stableto lower expected sequential volumes and flatthe sequentialexpectation that gross profit per ton.ton will normalize as raw material costs are expected to catch up to the pricing actions we implemented in the third quarter.

Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, decreased by $153$126 million during the first sixnine months of fiscal 2026, largely reflecting a higher commercial paper balance at MarchJune 31,30, 2026 due in part fromto our funding of our acquisition of MXCB.MXCB and higher net working capital. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $252$250 million and borrowing availability under our revolving credit agreementsagreement of $1.1 billion.

$1During the third quarter of fiscal 2026, we entered into a new $1.3 billion unsecured revolving credit agreement (the “U.S. Credit Agreement”) with JPMorgan Chase Bank, N.A.,N.A. and JPMorgan SE, as Administrative Agent, Citibank, N.A., as Syndication Agent, and the other lenders party thereto, which matures in May 2031. Concurrently with entering into the U.S. Credit Agreement, we terminated our $1 billion revolving credit agreement with JPMorgan Chase Bank, N.A., and the other lenders party thereto, and our €300 million revolving credit agreement with PNC Bank, National Association, and the other lenders party thereto (the “Euro Credit Agreement”), both of which were scheduled to mature 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.

As of MarchJune 31,30, 2026, we were in compliance with the debt covenantscovenant under the U.S. Credit Agreements,Agreement, which, with limited exceptions, requirerequires us to comply on a quarterly basis with a leverage test requiring the ratio of consolidated net debt to consolidated EBITDA not to exceed 3.503.75 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$200 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 U.S. Credit Agreements,Agreement, 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 MarchJune 31,30, 20262026, andwe had $84 million of borrowings under the U.S. Credit Agreement. At September 30, 2025, we had $126$130 million and $130 million, respectively, of borrowings under the Euro Credit Agreement and no outstanding borrowings under the $1.0 billion U.S. Credit Agreement at either date.Agreement. There was $148$118 million and $6 million of commercial paper outstanding as of MarchJune 31,30, 2026 and September 30, 2025, respectively.

We anticipate sufficient liquidity from (i) cash on hand; (ii) cash flows from operating activities; and (iii) cash available from the U.S. Credit AgreementsAgreement 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.

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 $203$278 million in the first sixnine months of fiscal 2026 compared to $197$446 million of cash provided by operating activities during the same period of fiscal 2025.

Cash provided by operating activities in the first sixnine months of fiscal 20252026 was driven by business earnings excluding the non-cash impacts of depreciation and amortization of $75$140 million, long-lived asset impairment charge of $24 million and cashemployee dividendsbenefit receivedplan fromsettlement onecharge of our equity investments of $12$29 million, which waswere partially offset by an increase in net working capital of $114$58 million. The increase in net working capital was largely driven by a decreaseincreases in Accounts Payableand notes receivable and accruedInventories, liabilities,which andwas partially offset by an increase in Accounts payable and notesaccrued receivable.liabilities.

Investing activities consumed $178$216 million of cash in the first sixnine months of fiscal 2026 compared to $174$239 million of cash consumed during the same period of fiscal 2025.

In the first sixnine months of fiscal 2026 and 2025, investing activities included $114$152 million and $149$210 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 second quarter of fiscal 2026, investing activities included $66 million of cash paid, net of cash acquired, for the acquisition of MXCB and in the first quarter of fiscal 2025, investing activities included $27 million for cash paid for an asset acquisition, both of which are described in Note C of our Notes to the Consolidated Financial Statements.

Capital expenditures for fiscal 2026 are expected to be between $200 million and $230$215 million. Our planned capital spending program for fiscal 2026 is for sustaining, compliance and improvement capital projects at our operating facilities.

Financing activities consumed $39$88 million of cash in the first sixnine months of fiscal 2026 compared to $7$190 million of cash consumed during the same period of fiscal 2025.

In the first sixnine months of fiscal 2026, financing activities primarily consisted of repurchases of common stock of $101 million andmillion, dividend payments of $48$72 million and $47 million to common stockholders and noncontrolling interest,interests, respectively.respectively, and net repayments of long-term debt of $39 million, which includes repayments of $133 million partially offset by proceeds of $94 million. These payments were partially offset by net proceeds from the issuance of commercial paper of $142$112 million and net proceeds from short-term borrowingborrowings of $19$59 million.

In the first sixnine months of fiscal 2025, financing activities primarily consisted of repurchases of common stock of $89$129 million,million and dividend payments of $47$71 million and $20$57 million to common stockholders and noncontrolling interest,interests, respectively. These payments were partially offset by net proceeds from the issuance of commercial paper of $145$52 million and net proceeds from short-term borrowings of $3 million.