- Loss from continuing operations
attributable to Ashland was $0.01 per diluted share, compared to
earnings of $1.38 per diluted share in the year-ago period
- Adjusted earnings from
continuing operations attributable to Ashland totaled $1.16 per
diluted share, compared to $1.41 in the year-ago period
- Ashland Specialty Ingredients
reports year-over-year growth in sales, volume and adjusted
EBITDA
- Ashland Performance Materials
logs strong year-over-year volume growth in Composites
COVINGTON, KY, January 26, 2017 -
Ashland Global Holdings Inc. (NYSE: ASH), a premier global
specialty chemicals company serving customers in a wide range of
consumer and industrial markets, and also the majority owner of
Valvoline Inc. (NYSE: VVV), today announced preliminary(1) financial
results for the first quarter of fiscal 2017.
Quarterly
Highlights
(in millions except per-share amounts) |
|
Quarter Ended Dec. 31, |
|
|
|
2016 |
|
|
2015 |
Operating income |
|
$ |
137 |
|
$ |
151 |
Key items* |
|
|
23 |
|
|
13 |
Adjusted operating income* |
|
$ |
160 |
|
$ |
164 |
Income from continuing operations |
|
$ |
10 |
|
$ |
91 |
Key items* |
|
|
73 |
|
|
3 |
Adjusted income from continuing operations |
|
$ |
83 |
|
$ |
94 |
Net income |
|
$ |
10 |
|
$ |
89 |
Adjusted EBITDA* |
|
$ |
215 |
|
$ |
247 |
Diluted earnings (loss) per share (EPS) |
|
|
|
|
|
|
From net income (loss) |
|
$ |
(0.01) |
|
$ |
1.35 |
|
|
|
|
|
|
|
From continuing operations |
|
$ |
(0.01) |
|
$ |
1.38 |
Key items* |
|
|
1.17 |
|
|
0.03 |
Adjusted EPS from continuing operations* |
|
$ |
1.16 |
|
$ |
1.41 |
|
|
|
|
|
|
|
Cash flows provided by operating activities from
continuing operations |
|
$ |
12 |
|
$ |
66 |
Free cash flow* |
|
|
(31) |
|
|
13 |
|
|
|
|
|
|
|
*See Tables 5, 6 and 7 for Ashland definitions and U.S.
GAAP reconciliations. Certain figures exclude Ashland's
non-controlling interest in Valvoline Inc. |
|
|
|
"We were pleased that Ashland
Specialty Ingredients returned to sales, volume and adjusted
earnings growth in the first quarter. This performance was
primarily driven by growth across several key end markets, both in
industrial and consumer, as well as good cost discipline," said
William A. Wulfsohn, Ashland chairman and chief executive officer.
"In addition, Ashland Performance Materials reported earnings
results that were better than expected due to strong Composites
volume. Meanwhile, Valvoline kicked off its first full quarter as a
public company with strong growth in lubricant gallons, sales and
earnings. Overall, Ashland's performance in the first quarter
reflects a solid start to the fiscal year."
First Quarter
Fiscal 2017 Results
For the quarter ended December 31, 2016, the company reported
earnings from continuing operations of $10 million, which includes
$11 million of earnings attributable to Ashland's non-controlling
interest in Valvoline Inc., on sales of nearly $1.2 billion. These
results included five key items that together reduced income from
continuing operations attributable to Ashland by approximately $73
million, net of tax, or $1.17 per diluted share. The majority of
this impact came from costs associated with the early retirement of
debt and the Valvoline separation. For the year-ago quarter, the
company reported earnings from continuing operations of $91
million, or $1.38 per diluted share, on sales of nearly $1.2
billion. There were three key items in the year-ago quarter that,
on a combined basis, reduced income from continuing operations
attributable to Ashland by $3 million after tax, or $0.03 per
diluted share. (Please refer to Table 5 of the accompanying
financial statements for details of key items.) For the remainder
of this news release, financial results have been adjusted to
exclude the effect of key items in both the current and prior-year
quarters.
On an adjusted basis, Ashland's
income from continuing operations attributable to Ashland in the
first quarter of fiscal 2017 was $1.16 per diluted share, versus
$1.41 per diluted share for the year-ago quarter.
Consolidation of
Valvoline Inc. Results
Ashland completed the initial public offering of Valvoline Inc. on
September 28, 2016, and Valvoline's results are consolidated into
Ashland's results for the first quarter of fiscal 2017. Valvoline's
net income attributable to Ashland's non-controlling interest of
$11 million, or $0.17 per year-ago diluted share, and adjusted
EBITDA of $21 million are excluded from Ashland's results. Ashland
currently owns an approximately 83 percent controlling interest in
the recently formed public company and, subject to market
conditions and other factors, the company presently intends to
distribute the remaining Valvoline Inc. shares following the
release of March-quarter earnings results by both Ashland and
Valvoline. Once the anticipated distribution occurs, nearly all
Valvoline results for all historical periods, including the quarter
in which the distribution occurs, will be reclassified into Ashland
discontinued operations.
Reportable
Segment Performance
To aid in the understanding of Ashland's ongoing business
performance, the results of Ashland's reportable segments, other
than Valvoline, are described below on an adjusted basis and
EBITDA, or adjusted EBITDA, is reconciled to operating income in
Table 7 of this news release. (For a more detailed review of the
segment results, please refer to the Investor Relations section of
ashland.com to review the slides and prepared remarks filed with
the Securities and Exchange Commission in conjunction with this
earnings release.) In addition, although Ashland provides
forward-looking guidance for adjusted EBITDA, Ashland is not
reaffirming or providing forward-looking guidance for U.S.
GAAP-reported financial measures or a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable U.S. GAAP measure because it is unable to predict with
reasonable certainty the ultimate outcome of certain significant
items without unreasonable effort.
Ashland Specialty Ingredients
(ASI) reported sales growth of 1 percent, to $482 million, and
volume growth of 6 percent, driven primarily by broad-based growth
within Industrial Specialties and certain key Consumer Specialties
end markets. ASI's adjusted EBITDA also grew 1 percent, to $95
million, compared to a year ago, consistent with the outlook
provided in November. Adjusted EBITDA margin was consistent at 19.7
percent during what is ASI's seasonally slowest quarter. Within
Industrial Specialties, volume rose 9 percent and sales climbed 6
percent as all end markets - coatings, adhesives, construction,
energy and performance specialties - showed solid gains. Consumer
Specialties volume declined 2 percent and sales fell 3 percent,
with the latter largely due to mix, pricing and foreign currency.
Consumer Specialties continued to drive growth across multiple end
markets, notably hair care and oral care, while results in the
pharma end market were consistent with the strong year-ago
period.
For fiscal 2017, ASI continues to
expect to report improved growth and profitability. Adjusted EBITDA
is expected to be in the range of $480-$510 million, which is
unchanged from the outlook provided in November. ASI is taking
actions to compensate for the negative impact of rising
raw-material costs and foreign currency fluctuations through cost
discipline and commercial excellence initiatives such as
value-based pricing. For the second quarter, sales are
expected to be in the range of $530-$545 million. Adjusted EBITDA
margin in the second quarter is expected to be in the range of
24-25 percent, versus 24 percent in the year-ago quarter.
Ashland Performance Materials
(APM) reported sales of $222 million in the first quarter, while
adjusted EBITDA came in better than expected at $21 million due to
strong volume growth in Composites. Composites volume grew 7
percent, with gains reported across all regions. I&S results
were well below prior year, reflecting lower butanediol (BDO)
pricing and approximately $9 million in incremental manufacturing
costs related to a planned catalyst change at the company's BDO
facility in Lima, Ohio. In total, I&S volumes declined 3
percent and sales fell 14 percent as a result of substantially
lower selling prices. However, the company began to see the impact
of recent BDO price increases, announced by both Ashland and other
global producers, during the first quarter. While derivatives
pricing continued to decline throughout the first quarter, prices
appear to have stabilized more recently.
For fiscal 2017, APM continues to
expect adjusted EBITDA to be in the range of $95-$105 million. This
range is unchanged from the outlook provided in November. In
I&S, APM continues to expect BDO and related derivatives
pricing to remain well below prior-year levels through the first
three quarters of fiscal 2017.
For the second quarter of fiscal
2017, APM expects sales to be in the range of $230-$250 million and
adjusted EBITDA margin to be in the range of 9.5-10.5 percent,
reflecting the year-over-year decline in pricing for BDO and
related derivatives.
Valvoline continued to perform
well in the first quarter, with strong growth in lubricant gallons,
sales and earnings. For more information on Valvoline's results,
please see Valvoline's first-quarter earnings release dated January
26, 2017. For the second quarter of fiscal 2017, Valvoline
anticipates aggregate adjusted EBITDA from operating segments of
$106-$111 million. This EBITDA excludes $17 million of estimated
net pension and other post-retirement benefit income which, when
consolidated with Ashland, is reported under the corporate
unallocated and other segment.
Ashland's effective tax rate for
the December 2016 quarter, after adjusting for key items, was 30
percent, slightly higher than the 26-28 percent previously expected
due to geographic mix of earnings. For the second quarter of fiscal
2017, on a consolidated basis and including Valvoline, the
effective tax rate is expected to be approximately 28-29 percent.
For fiscal 2017, excluding Valvoline, Ashland expects an adjusted
effective tax rate of 10-15 percent, reflecting Ashland's global
footprint.
Outlook
"With the planned final separation of Valvoline just a few months
away, our entire organization is squarely focused on delivering
against Ashland's 2017 plan and positioning the company for
profitable growth as a pure-play specialty chemicals company,"
Wulfsohn said.
"In addition to completing the
Valvoline separation, Ashland has two core priorities for the year
ahead. The first is to deliver on our fiscal 2017 plan. This plan
includes mid-single-digit EBITDA growth at ASI, stabilizing pricing
within the I&S division at APM, and taking aggressive action to
reduce year-over-year SG&A through previously announced
cost-savings initiatives. Our second core priority is to 'pivot' to
becoming the leading premier specialty chemicals company. We will
do this by capitalizing on our highly differentiated portfolio of
specialty ingredients, delivering top-quartile EBITDA margins and
growth, and consistently driving strong cash conversion.
"Innovation will play a critical
role. To accelerate progress in this important area, we recently
launched a multifunctional engagement team. This team is tasked
with increasing ASI's sales from new products by expanding the size
of the innovation pipeline and accelerating the rate at which we
commercialize these new technologies. At the same time, our
commercial leadership team is working to ensure Ashland's sales
teams capture the true value of our market-leading technology and
drive share gains through a focused commercial excellence program.
Additionally, we must continue to execute on our previously
announced cost-savings initiatives. We look forward to discussing
Ashland's strategy, metrics and financial outlook in greater detail
during our planned investor conference in New York City this
spring," Wulfsohn said.
Ashland plans to host an Investor
Day at the JW Marriott Essex House at 160 Central Park South in New
York City on Monday, May 1, 2017. More details will be available at
a later date.
Conference Call
Webcast
Ashland will host a live webcast of its first-quarter conference
call with securities analysts at 9 a.m. EST Friday, January 27,
2017. The webcast will be accessible through Ashland's website at
http://investor.ashland.com. Following the live event, an archived
version of the webcast and supporting materials will be available
for 12 months.
Use of Non-GAAP
Measures
Ashland 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 and Adjusted EBITDA 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 and operating income. The adjustments
Ashland makes to derive the non-GAAP measures of EBITDA and
Adjusted EBITDA 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 and Adjusted EBITDA 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.
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.
The non-GAAP information provided
may not be consistent with the methodologies used by other
companies. All non-GAAP amounts have been reconciled with reported
GAAP results in Tables 5, 6 and 7 of the financial statements
provided with this news release.
About Ashland
Ashland Global Holdings Inc. (NYSE: ASH) is a premier global
specialty chemicals company serving customers in a wide range of
consumer and industrial markets, including adhesives, architectural
coatings, automotive, construction, energy, food and beverage,
personal care and pharmaceutical. At Ashland, we are 6,000
passionate, tenacious solvers - from renowned scientists and
research chemists to talented engineers and plant operators - who
thrive on developing practical, innovative and elegant solutions to
complex problems for customers in more than 100 countries. Ashland
also maintains a controlling interest in Valvoline Inc. (NYSE:
VVV), a premium consumer-branded lubricant supplier.
Visit ashland.com to learn more.
C-ASH
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. These
forward-looking statements include statements relating to the
status of the separation process and the expected completion of the
separation through the subsequent distribution of Valvoline common
stock. In addition, 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 and financial condition, the separation of Ashland's
specialty chemicals business and Valvoline Inc. ("Valvoline"), the
initial public offering of 34,500,000 shares of Valvoline common
stock (the "IPO"), the expected timetable for completing the
separation, the strategic and competitive advantages of each
company, and future opportunities for each company, as well as the
economy and other future events or circumstances. 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 possibility that the separation will not be
consummated within the anticipated time period or at all, including
as the result of regulatory, market or other factors; regulatory,
market or other factors and conditions affecting the distribution
of Ashland's remaining interests in Valvoline; the potential for
disruption to Ashland's business in connection with the separation;
the potential that Ashland does not realize all of the expected
benefits of the IPO, new holding company reorganization or
separation; 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);
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); and severe
weather, natural disasters, and legal proceedings and claims
(including environmental and asbestos matters). Various risks and
uncertainties may cause actual results to differ materially from
those stated, projected or implied by any forward-looking
statements, including, 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, as well as risks related
to the separation that are described in the Form S-4 filed with the
SEC, which is available on Ashland's website or on the SEC's
website, and Valvoline's Form S-1 filed with the SEC, available on
the SEC's website. 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. Information
on Ashland's website is not incorporated into or a part of this
news release.
(1)
Preliminary Results
Financial results are preliminary until Ashland's Form 10-Q is
filed with the SEC.
SM Service
mark, Ashland or its subsidiaries, registered in various
countries.
(TM) Trademark, Ashland or its subsidiaries, registered in various
countries.
FOR FURTHER
INFORMATION:
Investor Relations:
Seth A.
Mrozek
+1 (859) 815-3527
samrozek@ashland.com
Media Relations:
Gary Rhodes
+1 (859) 815-3047
glrhodes@ashland.com
Ashland Q1 2017 Earnings Slides
Ashland Q1 2017 Earnings Release & Tables
Ashland Q1 2017 Earnings Prepared Remarks
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Ashland Inc. via Globenewswire
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