Ashland Global Holdings Inc. (NYSE: ASH) today announced
preliminary1 financial results for the third quarter of fiscal year
2021, which ended June 30, 2021. The global specialty materials
company serves customers in a wide range of consumer and industrial
markets.
Sales were $637 million, up eleven percent
compared to the prior-year period. Strong demand was partially
offset by continued weakness in hand-sanitizer ingredients and
Avoca. Global supply-chain and logistics disruptions also limited
the company’s ability to meet all customer demand. Foreign currency
favorably impacted sales by three percent.
Net income was $80 million compared to $37
million in the prior-year quarter. Income from continuing
operations was $87 million compared to $50 million in the
prior-year quarter, or $1.40 per diluted share compared to $0.81 in
the prior-year quarter. Adjusted income from continuing operations
excluding intangibles amortization expense was $75 million compared
to $68 million in the prior-year quarter, or $1.22 per diluted
share, up from $1.12 in the prior-year quarter. Adjusted EBITDA was
$148 million, up from $143 million in the prior-year quarter.
Global supply-chain disruptions and raw-material cost escalation in
Performance Adhesives contributed to higher-than-expected costs
during the quarter.
Cash flows provided by operating activities
totaled $233 million compared to $140 million in the prior-year
quarter. Free cash flows totaled $210 million compared to $112
million in the prior-year quarter. The current-year period included
$90 million of cash inflows from the new U.S. Accounts Receivables
Sales Program.
“As we indicated during our earnings update on
June 10, overall demand during the quarter was strong, though
global supply-chain challenges continued to impact both sales and
costs,” said Guillermo Novo, chairman and chief executive officer,
Ashland. “Sales for our industrial businesses reached pre-pandemic
levels and the demand for core consumer products demonstrated
continued resilience.”
“I am pleased with the progress our team has
made executing our strategy, especially in the context of a
difficult operating environment,” continued Novo. “The persistence
of the global pandemic continues to impact consumer behavior,
delaying recovery of some key global markets. In addition,
challenges related to raw-material and supply-chain logistics are
realities we continued to face during the quarter. We are working
to capitalize on the strong demand environment and satisfy
incremental demand from our customers. As such, our expectations
for Ashland’s full-year results have not changed,” added Novo.
“Finally, I am pleased that we closed the
Schülke & Mayr personal care transaction during the quarter and
we welcomed our new colleagues to the Ashland team. Our
well-experienced teams are working diligently to integrate the
acquisition into our existing portfolio for consumer products. We
are establishing a center-of-excellence at the Hamburg, Germany
location, and we are excited by the opportunity to reach a broader
group of customers with new technology that is crucial to our
strategy of growth through sustainable innovation,” concluded
Novo.
Reportable Segment
PerformanceTo aid in the understanding of Ashland’s
ongoing business performance, the results of Ashland’s reportable
segments are described below on an adjusted basis. In addition,
EBITDA and adjusted EBITDA are reconciled to operating income in
Table 4. Free cash flow and adjusted operating income are
reconciled in Table 6 and adjusted income from continuing
operations, adjusted diluted earnings per share and adjusted
diluted earnings per share excluding intangible amortization
expense are reconciled in Table 7 of this news release. These
adjusted results are considered non-GAAP financial measures.
For a full description of the non-GAAP financial measures used, see
the “Use of Non-GAAP Measures” section that further describes these
adjustments below.
Consumer Specialties
Sales were $340 million, down one percent from
the prior-year quarter. Pharma sales were softer than the strong
prior-year period, and supply-chain challenges constrained our
ability to deliver products globally. Nutrition and nutraceuticals
sales reflected an improved demand environment. Sales in personal
care and household end markets were down primarily due to weakness
in hand-sanitizer ingredients and Avoca when compared to the prior
year. These impacts were partially offset by the addition of sales
from the recently acquired Schülke & Mayr personal care
business. Foreign currency favorably impacted sales by three
percent.
Operating income was $53 million, compared to
$56 million in the prior-year quarter. Adjusted EBITDA was $92
million, up two percent from the prior-year quarter, primarily
reflecting favorable foreign currency and improved costs.
Industrial Specialties
Sales were $263 million, up 28 percent from the
prior-year quarter when pandemic-related lockdowns were in effect
across much of the globe. Improved demand was realized across all
end markets and regions of the world, except for global energy
markets, which remain challenged. Foreign currency favorably
impacted sales by four percent.
Operating income was $28 million, consistent
with the prior-year quarter. Adjusted EBITDA was $55 million, up
two percent from the prior-year quarter, as strong sales growth was
offset by increased manufacturing and shipping costs in addition to
unfavorable price versus raw-material costs within Performance
Adhesives.
Intermediates &
Solvents
Sales were $49 million, up 32 percent from the
prior-year quarter, driven by higher pricing for both merchant and
captive sales.
Operating income was $11 million, up from $7
million in the prior-year quarter. Adjusted EBITDA was $15 million,
up from $11 million in the prior-year quarter, reflecting the
higher pricing.
Unallocated & Other
Unallocated and Other expense was $30 million,
compared to $43 million in the prior-year quarter which included
$14 million of restructuring costs. Adjusted Unallocated and Other
expense was $14 million, compared to $12 million in the prior-year
quarter, primarily due to higher deferred-compensation accruals in
the current-year period.
Conference Call WebcastAshland
will host a live webcast of its third-quarter conference call with
securities analysts at 9:00 a.m. ET on Wednesday, July 28, 2021.
The webcast will be accessible through Ashland’s website at
http://investor.ashland.com and will include a slide presentation.
Following the live event, an archived version of the webcast and
supporting materials will be available for 12 months on
http://investor.ashland.com.
Use of Non-GAAP MeasuresAshland
believes that by removing the impact of depreciation and
amortization and excluding certain non-cash charges, amounts spent
on interest and taxes and certain other charges that are highly
variable from year to year, EBITDA, adjusted EBITDA, EBITDA margin
and adjusted EBITDA margin provide Ashland’s investors with
performance measures that reflect the impact to operations from
trends in changes in sales, margin and operating expenses,
providing a perspective not immediately apparent from net income,
operating income, net income margin and operating income margin.
The adjustments Ashland makes to derive the non-GAAP measures of
EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin
exclude items which may cause short-term fluctuations in net income
and operating income and which Ashland does not consider to be the
fundamental attributes or primary drivers of its business. EBITDA,
adjusted EBITDA, EBITDA margin and adjusted EBITDA margin provide
disclosure on the same basis as that used by Ashland’s management
to evaluate financial performance on a consolidated and reportable
segment basis and provide consistency in our financial reporting,
facilitate internal and external comparisons of Ashland’s
historical operating performance and its business units and provide
continuity to investors for comparability purposes. EBITDA margin
and adjusted EBITDA margin are defined as EBITDA and adjusted
EBITDA divided by sales for the corresponding period.
Key items, which are set forth on Table 7 of
this release, are defined as financial effects from significant
transactions that, either by their nature or amount, have caused
short-term fluctuations in net income and/or operating income which
Ashland does not consider to most accurately reflect Ashland’s
underlying business performance and trends. Further, Ashland
believes that providing supplemental information that excludes the
financial effects of these items in the financial results will
enhance the investor’s ability to compare financial performance
between reporting periods.
Tax-specific key items, which are set forth on
Table 7 of this release, are defined as financial transactions, tax
law changes or other matters that fall within the definition of key
items as described above. These items relate solely to tax
matters and would only be recorded within the income tax caption of
the Statement of Consolidated Income. As with all key items,
due to their nature, Ashland does not consider the financial
effects of these tax-specific key items on net income to be the
most accurate reflection of Ashland’s underlying business
performance and trends.
The free cash flow metric enables Ashland to
provide a better indication of the ongoing cash being generated
that is ultimately available for both debt and equity holders as
well as other investment opportunities. Unlike cash flow provided
by operating activities, free cash flow includes the impact of
capital expenditures from continuing operations, providing a more
complete picture of cash generation. Free cash flow has certain
limitations, including that it does not reflect adjustment for
certain non-discretionary cash flows such as mandatory debt
repayments. The amount of mandatory versus discretionary
expenditures can vary significantly between periods.
Adjusted diluted earnings per share is a
performance measure used by Ashland and is defined by Ashland as
earnings (loss) from continuing operations, adjusted for identified
key items and divided by the number of outstanding diluted shares
of common stock. Ashland believes this measure provides
investors additional insights into operational performance by
providing earnings and diluted earnings per share metrics that
exclude the effect of the identified key items and tax specific key
items.
Adjusted diluted earnings per share, excluding
intangibles amortization expense metric enables Ashland to
demonstrate the impact of non-cash intangibles amortization expense
on earnings per share, in addition to key items previously
mentioned. Ashland’s management believes this presentation is
helpful to illustrate how previous acquisitions impact applicable
period results.
About Ashland
Ashland Global Holdings Inc. (NYSE: ASH) is a premier specialty
materials company with a conscious and proactive mindset for
sustainability. The company serves customers in a wide range of
consumer and industrial markets, including adhesives, architectural
coatings, automotive, construction, energy, food and beverage,
nutraceuticals, personal care and pharmaceutical. Approximately
4,200 passionate, tenacious solvers – from renowned scientists and
research chemists to talented engineers and plant operators –
thrive on developing practical, innovative and elegant solutions to
complex problems for customers in more than 100
countries. Visit ashland.com and Ashland |
Sustainability Overview to learn more.
Forward-Looking Statements This
news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended.
Ashland has identified some of these forward-looking statements
with words such as “anticipates,” “believes,” “expects,”
“estimates,” “is likely,” “predicts,” “projects,” “forecasts,”
“objectives,” “may,” “will,” “should,” “plans” and “intends” and
the negative of these words or other comparable terminology.
Ashland may from time to time make forward-looking statements in
its annual reports, quarterly reports and other filings with the
U.S. Securities and Exchange Commission (SEC), news releases and
other written and oral communications. These forward-looking
statements are based on Ashland’s expectations and assumptions, as
of the date such statements are made, regarding Ashland’s future
operating performance, financial condition, and expected effects of
the COVID-19 pandemic on Ashland’s business, as well as the economy
and other future events or circumstances. These statements include
but may not be limited to Ashland’s expectations regarding its
ability to drive sales and earnings growth and realize further cost
reductions.
Ashland’s expectations and assumptions include,
without limitation, internal forecasts and analyses of current and
future market conditions and trends, management plans and
strategies, operating efficiencies and economic conditions (such as
prices, supply and demand, cost of raw materials, and the ability
to recover raw-material cost increases through price increases),
and risks and uncertainties associated with the following: the
impact of acquisitions and/or divestitures Ashland has made or may
make (including the possibility that Ashland may not realize the
anticipated benefits from such transactions); Ashland’s substantial
indebtedness (including the possibility that such indebtedness and
related restrictive covenants may adversely affect Ashland’s future
cash flows, results of operations, financial condition and its
ability to repay debt); severe weather, natural disasters,
public-health crises (including the current COVID-19 pandemic),
cyber events and legal proceedings and claims (including product
recalls, environmental and asbestos matters); the effects of the
COVID-19 pandemic on the geographies in which we operate, the end
markets we serve and on our supply chain and customers, and without
limitation, risks and uncertainties affecting Ashland that are
described in Ashland’s most recent Form 10-K (including Item 1A
Risk Factors) filed with the SEC, which is available on Ashland’s
website at http://investor.ashland.com or on the SEC’s website at
http://www.sec.gov. Various risks and uncertainties may cause
actual results to differ materially from those stated, projected or
implied by any forward-looking statements. The extent and duration
of the COVID-19 pandemic on our business and operations is
uncertain. Factors that will influence the impact on our business
and operations include the duration and extent of the pandemic, the
extent of imposed or recommended containment and mitigation
measures, and the general economic consequences of the pandemic.
Ashland believes its expectations and assumptions are reasonable,
but there can be no assurance that the expectations reflected
herein will be achieved. Unless legally required, Ashland
undertakes no obligation to update any forward-looking statements
made in this news release whether as a result of new information,
future events or otherwise.
1Financial results are preliminary until
Ashland’s Form 10-Q is filed with the U.S. Securities and Exchange
Commission.
™ Trademark, Ashland or its subsidiaries,
registered in various countries.
FOR FURTHER INFORMATION:
Investor
Relations:
Media Relations:Seth A.
Mrozek
Carolmarie C. Brown+1 (302)
594-5010
+1 (302)
995-3158samrozek@ashland.com
ccbrown@ashland.com
- Q3 2021 Earnings Release with Tables - vFINAL
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