Ashland Inc. (NYSE: ASH) today provided an update for preliminary
fiscal 2023 first-quarter financial results1 and maintained its
outlook for fiscal year 2023 results. Additional information
regarding first-quarter fiscal 2023 earnings and full-year outlook
will be shared during a conference call webcast with securities
analysts on Wednesday, February 1, 2023.
Preliminary fiscal 2023 first-quarter
financial resultsAshland’s financial results during the
quarter reflect rapidly evolving dynamics in the global markets the
company serves, namely:
- Strong global demand for pharmaceutical ingredients;
- Resilient margins driven by pricing and mix-improvement actions
- Weaker demand for specialty additives and personal care
ingredients driven primarily by the impact of COVID-19 on the China
re-opening, the general economic slowdown in Europe and significant
distributor destocking in China and Europe;
- Lower operating margins within Specialty Additives driven by
planned maintenance shutdowns plus COVID-19 dynamics which resulted
in an extended unplanned shutdown at the company’s Nanjing, China,
facility late in the quarter.
Sales in the quarter were approximately $525
million, up three percent versus the prior-year period. Sales on a
constant-currency basis increased by approximately seven percent.
Sales grew by double-digits in the company’s Life Sciences segment
driven by strong demand for pharmaceutical ingredients. Sales
declined in both the Specialty Additives and Personal Care segments
driven by the COVID-19 impact in China, general economic weakness
in Europe and aggressive inventory destocking by distributors in
both China and Europe.
In general, ingredient and additive demand at
the company’s major customers remained resilient. Destocking by
customers was customer-specific with no underlying patterns in any
markets. Price and mix performance remained strong across all
Ashland expects income from continuing
operations during the first fiscal quarter of approximately $42
million, or approximately $0.76 per diluted share. Adjusted
earnings from continuing operations excluding intangibles
amortization are expected to be approximately $54 million, or $0.97
per diluted share. Net income (including discontinued operations)
is expected to be approximately $40 million.
Ashland’s Adjusted EBITDA is expected to be
approximately $108 million, up two percent versus prior year.
Adjusted EBITDA on a constant-currency basis increased by
approximately 15 percent. Adjusted EBITDA growth was driven by
strong demand for pharmaceutical ingredients and partially offset
by planned facility shutdowns within Specialty Additives. Continued
improvements in pricing and mix were also partially offset by
weaker Specialty Additives and Personal Care demand in China and
December winter storm in the
U.S.During December, the winter storm that impacted much
of the United States also caused an extended, unplanned shutdown at
the company’s facility in Calvert City, Kentucky, along with lesser
impacts at several other facilities. Although the extended shutdown
did not meaningfully impact sales or margins during the
fiscal-first quarter, it will result in incremental repair,
maintenance and other manufacturing costs. Ashland expects to
realize approximately $15 million of these incremental costs
related to the event during the company’s fiscal-second quarter.
The company plans to offset a meaningful portion of these
incremental costs during the third and fourth fiscal quarters as it
reassesses the need for other scheduled maintenance shutdowns.
Fiscal year 2023 outlookIn
November 2022, Ashland provided its financial outlook for fiscal
year 2023. This outlook highlighted European economic and
geopolitical dynamics and the impact of COVID-19 and the China
re-opening as major uncertainties in the forecast. Despite these
continuing uncertainties, the company remains focused on the
business fundamentals within its control.
Based on current expectations and considering
external uncertainties, Ashland continues to expect sales in the
range of $2.5 billion to $2.7 billion for fiscal year 2023,
consistent with prior expectations. In addition, the company
continues to expect Adjusted EBITDA to be within the prior outlook
range of $600 million to $650 million, with the current forecast
models indicating earnings below the mid-point of that range.
Although external uncertainties remain high, the company expects
improved market-trend visibility by the end of the fiscal-second
quarter. By this time, the company expects to have more clarity on
any additional inventory destocking dynamics, conditions in Europe
and the China re-opening.
“Ashland is executing its plans and priorities,
focusing on high-quality resilient markets, strong price and mix
management, disciplined operations, accelerating our innovation
initiatives and investing in our future,” said Guillermo Novo,
chair and chief executive officer, Ashland. “The December quarter
results reflect this continued discipline and the reality of
rapidly evolving dynamics in an uncertain global marketplace.
Operating discipline and agility remain critical success drivers in
these uncertain times, especially around pricing and mix
management. During the quarter, we experienced several
external headwinds impacting our results. COVID-19 had a
significant impact on our demand, employees, and operations in
China. We are grateful that our team in China has recovered and
remains resilient. Strength in pharmaceutical ingredient sales was
offset by weaker end-market demand in other businesses. Inventory
management actions by distributors and some customers impacted our
demand, especially late in the quarter. As a result, our sales for
the quarter in these markets were below our expectations.”
“This is a time for caution. Despite the
challenging environment and the unplanned winter storm impact in
the U.S., we remain confident about the future,” continued Novo.
“Our customers remain resilient. The pricing and mix-improvement
actions we have taken position us well to cover current cost
inflation and we continue to invest in our future. While the
results this quarter did not meet our expectations, we are
confident in the path forward. I look forward to discussing our
fiscal-first quarter financial results and outlook during our
upcoming earnings call and webcast,” concluded Novo.
The information in this release is preliminary,
based upon information available at the time of this news release,
and actual results may differ.
Conference Call WebcastAshland
plans to issue its first-quarter earnings release at approximately
5 p.m. ET on Tuesday, January 31, 2023. The company’s live webcast
with securities analysts will include an executive summary and
detailed remarks. The live webcast will take place at 9 a.m. ET on
Wednesday, February 1, 2023. Simultaneously, the company will post
a slide presentation in the Investor Relations section of its
website at http://investor.ashland.com.
Among those participating in the webcast
presentation will be:
- Guillermo Novo, chair and chief executive officer;
- Kevin Willis, senior vice president and chief financial
- Seth Mrozek, director, investor relations.
To access the call by phone, please go to this
registration link and you will be provided with dial in details. To
avoid delays, we encourage participants to dial into the conference
call fifteen minutes ahead of the scheduled start time.
The webcast and supporting materials will be
accessible through the Investor Relations section of Ashland's
website at http://investor.ashland.com. Following the live event,
an archived version of the webcast and supporting materials will be
available on the Ashland website for 12 months.
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, adjusted EBITDA provides 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. The adjustments Ashland makes to derive the non-GAAP
measure of adjusted EBITDA exclude items which may cause short-term
fluctuations in net income and which Ashland does not consider to
be the fundamental attributes or primary drivers of its business.
Adjusted EBITDA provides 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
Key items, which are set forth on Table 2
accompanying 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.
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
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
Ashland Inc. (NYSE: ASH) is a global additives and specialty
ingredients company with a conscious and proactive mindset for
environment, social and governance (ESG). The company serves
customers in a wide range of consumer and industrial markets,
including architectural coatings, construction, energy, food and
beverage, nutraceuticals, personal care and pharmaceutical.
Approximately 3,900 passionate, tenacious solvers thrive on
developing practical, innovative and elegant solutions to complex
problems for customers in more than 100 countries.
Visit ashland.com and ashland.com/ESG to learn
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
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,
operating cash flow and liquidity, 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 manage costs.
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, and the ongoing Ukraine and Russia conflict, 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.
1 Financial results are preliminary until
Ashland’s Form 10-Q is filed with the SEC.
™ Trademark, Ashland or its subsidiaries,
registered in various countries.
FOR FURTHER INFORMATION:
Seth A. Mrozek
Carolmarie C. Brown
+1 (302) 594-5010
+1 (302) 995-3158
- Q1 2023 Earnings Update wFinancial Tables - vFINAL
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