Earnings Per Share

6 Months Ended

Mar. 31, 2024

G. Earnings Per Share

The following tables summarize the components of the basic and diluted earnings (loss) per common share (“EPS”) computations:


	Three Months Ended March 31				Six Months Ended March 31
	2024		2023		2024		2023
	(In millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to Cabot Corporation	$	84	$	75	$	134	$	129
Less: Dividends and dividend equivalents to participating securities		—		1		—		1
Less: Undistributed earnings allocated to participating securities(1)		1		1		2		2
Earnings (loss) allocated to common stockholders (numerator)	$	83	$	73	$	132	$	126

Weighted average common shares and participating securities outstanding		56.2		57.6		56.2		57.6
Less: Participating securities(1)		0.8		1.3		0.9		1.3
Adjusted weighted average common shares (denominator)		55.4		56.3		55.3		56.3

Earnings (loss) per common share - basic:	$	1.50	$	1.31	$	2.39	$	2.24

Diluted EPS:
Earnings (loss) allocated to common stockholders	$	83	$	73	$	132	$	126
Plus: Earnings allocated to participating securities		1		2		2		3
Less: Adjusted earnings allocated to participating securities(2)		1		2		2		3
Earnings (loss) allocated to common stockholders (numerator)	$	83	$	73	$	132	$	126

Adjusted weighted average common shares outstanding		55.4		56.3		55.3		56.3
Effect of dilutive securities:
Common shares issuable(3)		0.4		0.5		0.5		0.4
Adjusted weighted average common shares (denominator)		55.8		56.8		55.8		56.7

Earnings (loss) per common share - diluted:	$	1.49	$	1.29	$	2.37	$	2.23

(1)

Participating securities consist of shares underlying unvested time-based restricted stock units (the "TSUs"), earned and unvested performance-based restricted stock units (the "PSUs", and referred to in this note collectively with the TSUs as the "RSUs"), stock units accounted for under the Supplemental 401(k) Plan portion of the Company’s Deferred Compensation and Supplemental Retirement Plan, and stock units and phantom stock units accounted for under the Company’s Non-Employee Directors’ Deferral Plan. The holders of RSUs are entitled to receive dividend equivalents, payable in cash, to the extent dividends are paid on the outstanding shares of Common Stock, and equal in value to the dividends that would have been paid in respect of the Common Stock underlying the RSU. The accounts of holders of stock units and phantom stock units are credited with dividend equivalents, which are payable, in stock or cash, as the case may be, with the distribution of account balances.

Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common and participating stockholders. Undistributed earnings are allocated to common and participating stockholders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:


	Three Months Ended March 31				Six Months Ended March 31
	2024		2023		2024		2023
	(In millions)
Calculation of undistributed earnings (loss):
Net income (loss) attributable to Cabot Corporation	$	84	$	75	$	134	$	129
Less: Dividends declared on common stock		23		21		45		42
Less: Dividends declared on participating securities		—		1		—		1
Undistributed earnings (loss)	$	61	$	53	$	89	$	86

Allocation of undistributed earnings (loss):
Undistributed earnings (loss) allocated to common stockholders	$	60	$	52	$	87	$	84
Undistributed earnings allocated to participating stockholders		1		1		2		2
Undistributed earnings (loss)	$	61	$	53	$	89	$	86

(2)

Undistributed earnings are adjusted for the assumed distribution of dividends to the dilutive securities, which are described in (3) below, and then reallocated to participating securities.

(3)

Represents incremental shares of common stock from the assumed exercise of stock options issued under Cabot’s equity incentive plans. For the three and six months ended March 31, 2024, 281,488 and 244,448 incremental shares of common stock, respectively, were excluded from the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive. For the three and six months ended March 31, 2023, 156,550 and 121,283 incremental shares of common stock, respectively, were excluded from the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.