Cabot (CBT) to Boost CCA Capacity to Support EV Transition
Cabot Corporation CBT plans to invest roughly $200 million in U.S. Conductive Carbon Additives (CCA) for Electric vehicle (EV) lithium-ion battery applications. This investment will take place over the next five years. The company will add capacity at its existing facility in Pampa, TX, focusing on expanding CBT’s CCA production in the United States.
This investment is expected to enhance CBT’s leadership position in the market and support the transition to EVs. The first phase of the project will include an investment of about $75-$90 million and is likely to add about 15,000 metric tons of annual CCA capacity in Texas.
The decarbonization of economies and the U.S. government’s plans and targeted efforts to build an EV supply chain have led to the importance of EVs. Federal and state governments’ actions to implement programs like grants, loans and tax incentives form part of these initiatives. The company believes that these efforts will open the doors for potential funding opportunities to expand its CCA production capacities.
The growth potential of important battery materials, like CCAs for EVs, in the United States is expected to surpass its global demand growth, which is likely to be 20-30% over the next five years. As EV penetration increases in the coming years, CBT remains committed to meeting the growing demand for EVs from its customers in the United States and helping onshore critical battery components such as CCAs.
CCAs provide electric conductivity to active materials and are an essential component for lithium-ion batteries. Cabot’s global presence in manufacturing assets, technology labs and commercial resources will support its customers through regional supply security. The company also holds the broadest portfolios of CCAs to deliver optimal performance, some of which include conductive carbons, carbon nanotubes (CNT), carbon nanostructures (CNS) etc.
Cabot’s CCA project, which is likely to commence at the end of 2025, is expected to add about 75 high-quality jobs in the United States. The company also operates a research and development facility and pilot plant in Pampa, which focuses on developing new process technology for batteries and other applications. The company plans to make additional investments to broaden the footprint of its U.S. manufacturing and technology over the next five years, along with investment in new CNT powder and dispersion capacity to extend its portfolio of innovative products for battery applications.
Cabot’s expects that its technology position and its existing network of plants and talent will position it uniquely to support the growth expectations of its customers. The company also expects its planned investment to solidify its position as a global leader in CCAs for lithium-ion battery applications.
CBT’s shares have gained 34.7% in the past year, outperforming industry’s growth of 2.5%.
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Cabot expects strength in the Reinforcement Materials segment and above-market growth in Battery Materials in fiscal 2023. The company predicts strong operating cash flow driven by solid EBITDA and its expectation for moderating feedstock costs. It sees adjusted earnings for 2023 in the range of $6.25-$6.75 per share.
Cabot Corporation Price and Consensus
Cabot Corporation price-consensus-chart | Cabot Corporation Quote
Zacks Rank & Key Picks
Cabot currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks to consider in the basic materials space include Nucor Corporation NUE, Freeport-McMoRan Inc. FCX and Air Products and Chemicals, Inc. APD. FCX and APD both have a Zacks Rank #2 (Buy), while NUE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor’s shares have gained 64.6% in the past year. The Zacks Consensus Estimate for earnings for the current year has been revised 10.4% upward in the past 60 days. NUE beat the Zacks Consensus Estimate in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.7% on average.
Freeport’s shares have gained 20.4% in the past year. The Zacks Consensus Estimate for earnings for the current year has been revised 21.2% upward in the past 60 days. FCX beat the Zacks Consensus Estimate in two of the last four quarters. It delivered a trailing four-quarter earnings surprise of 1.1% on average.
Air Products’ shares have gained 11.4% in the past year. The Zacks Consensus Estimate for APD’s earnings for the current fiscal has been revised 0.35% upward in the past 60 days. The company has a projected earnings growth rate of 9.7% for the current fiscal year.
APD topped Zacks Consensus Estimate in all of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 1.7% on average
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