Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2022

Components of Basic and Diluted Earnings (Loss) Per Common Share (EPS)

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

	Three Months Ended June 30				Nine Months Ended June 30
	2022		2021		2022		2021
	(In millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to Cabot Corporation	$	97	$	86	$	115	$	221
Less: Dividends and dividend equivalents to participating securities		—		1		1		1
Less: Undistributed earnings allocated to participating securities⁽¹⁾		1		1		1		2
Earnings (loss) allocated to common shareholders (numerator)	$	96	$	84	$	113	$	218

Weighted average common shares and participating securities outstanding		57.2		57.5		57.4		57.4
Less: Participating securities⁽¹⁾		0.9		0.8		0.9		0.7
Adjusted weighted average common shares (denominator)		56.3		56.7		56.5		56.7

Earnings (loss) per common share - basic:	$	1.70	$	1.48	$	2.00	$	3.85

Diluted EPS:
Earnings (loss) allocated to common shareholders	$	96	$	84	$	113	$	218
Plus: Earnings allocated to participating securities		1		1		2		2
Less: Adjusted earnings allocated to participating securities⁽²⁾		1		1		2		2
Earnings (loss) allocated to common shareholders (numerator)	$	96	$	84	$	113	$	218

Adjusted weighted average common shares outstanding		56.3		56.7		56.5		56.7
Effect of dilutive securities:
Common shares issuable⁽³⁾		0.5		0.3		0.4		0.1
Adjusted weighted average common shares (denominator)		56.8		57.0		56.9		56.8

Earnings (loss) per common share - diluted:	$	1.69	$	1.48	$	1.99	$	3.84

⁽¹⁾

Participating securities consist of shares underlying all outstanding and achieved performance-based restricted stock units and all unvested time-based restricted stock units. The holders of these units are entitled to receive dividend equivalents payable in cash to the extent dividends are paid on the Company’s outstanding common stock and equal in value to the dividends that would have been paid in respect of the shares underlying such units.

Calculation of Undistributed Earnings

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

	Three Months Ended June 30				Nine Months Ended June 30
	2022		2021		2022		2021
	(In millions)
Calculation of undistributed earnings (loss):
Net income (loss) attributable to Cabot Corporation	$	97	$	86	$	115	$	221
Less: Dividends declared on common stock		21		20		63		60
Less: Dividends declared on participating securities		—		1		1		1
Undistributed earnings (loss)	$	76	$	65	$	51	$	160

Allocation of undistributed earnings (loss):
Undistributed earnings (loss) allocated to common shareholders	$	75	$	64	$	50	$	158
Undistributed earnings allocated to participating shareholders		1		1		1		2
Undistributed earnings (loss)	$	76	$	65	$	51	$	160

⁽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 (i) assumed exercise of stock options issued under Cabot’s equity incentive plans; and (ii) assumed issuance of shares to employees pursuant to the Company’s Deferred Compensation and Supplemental Retirement Plan. For the three and nine months ended June 30, 2022, 169,425 and 204,796 incremental shares of common stock were excluded from the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive. For the three and nine months ended June 30, 2021, 177,673 and 956,695 incremental shares of common stock were excluded from the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.