- Loss from continuing operations
attributable to Ashland was $0.26 per diluted share, compared to
earnings of $0.38 per diluted share in the year-ago period;
Operating income totaled $37 million, versus $57 million a year
ago
- Adjusted earnings per share
attributable to Ashland were $0.83, up 6 percent from $0.78 a year
ago; Adjusted EBITDA totaled $161 million, compared to $167 million
a year ago
- Acquisition of Pharmachem,
completed ahead of schedule, was accretive to earnings in the
quarter and strengthens Ashland's specialty products portfolio
COVINGTON, KY, August 1, 2017 -
Ashland Global Holdings Inc. (NYSE: ASH), a premier global
specialty chemicals company serving customers in a wide range of
consumer and industrial markets, today announced
preliminary(1) financial
results for the third quarter of fiscal 2017.
Quarterly
Highlights
(in millions except per-share amounts) |
|
Quarter Ended June 30, |
|
|
|
2017 |
|
|
2016 |
Operating income(1) |
|
$ |
37 |
|
$ |
57 |
Key items* |
|
|
52 |
|
|
31 |
Adjusted operating income* |
|
$ |
89 |
|
$ |
88 |
Income (loss) from continuing operations |
|
$ |
(16) |
|
$ |
24 |
Key items* |
|
|
68 |
|
|
25 |
Adjusted income from continuing operations |
|
$ |
52 |
|
$ |
49 |
Net income (loss) |
|
$ |
(30) |
|
$ |
71 |
Adjusted EBITDA*(1) |
|
$ |
161 |
|
$ |
167 |
Diluted earnings per share (EPS) |
|
|
|
|
|
|
From net income (loss) attributable to Ashland |
|
$ |
(0.54) |
|
$ |
1.13 |
|
|
|
|
|
|
|
From continuing operations attributable to Ashland* |
|
$ |
(0.26) |
|
$ |
0.38 |
Key items* |
|
|
1.09 |
|
|
0.40 |
Adjusted EPS from continuing operations* |
|
$ |
0.83 |
|
$ |
0.78 |
|
|
|
|
|
|
|
Cash flows provided by operating activities from
continuing operations |
|
$ |
132 |
|
$ |
88 |
Free cash flow* |
|
$ |
79 |
|
$ |
27 |
|
|
|
|
|
|
|
1This includes
$17 million of pension income, less $6 million of Valvoline
stranded costs, in 2016, but not 2017.
*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. |
|
|
|
"The Ashland team took action to
drive year-over-year increases in sales and earnings during the
third quarter, our first as a pure-play specialty chemicals company
following the successful final separation of Valvoline in May,"
said William A. Wulfsohn, Ashland chairman and chief executive
officer. "Within Specialty Ingredients, the team delivered a 7
percent sales increase. The acquisition of Pharmachem, which was
completed earlier than anticipated, was an important contributor to
the sales gain in the quarter. Within Composites, sales grew by 20
percent, reflecting strong volume growth in numerous global end
markets and disciplined pricing. Within Intermediates and Solvents,
sales rose 9 percent amid improving global demand and a continued
recovery in butanediol pricing. In the aggregate, the combined
earnings results from the three operating segments exceeded the
outlooks provided in late April."
He continued: "We were excited to
close the Pharmachem transaction and welcome their talented team to
our organization. The integration is on track, with Pharmachem
accretive to earnings in the third quarter, and we anticipate
achieving meaningful cost synergies from leveraging combined
capabilities, as well as tax synergies driven by the integration of
Pharmachem into our global business structure. We also see a number
of growth opportunities, as Pharmachem will enhance our position in
fast-growing nutraceutical end markets, open a new opportunity
within fragrances and flavors, and bolster Ashland's food
ingredient division by adding customized functional solutions."
Third Quarter
Fiscal 2017 Results
For the quarter ended June 30,
2017, the company reported a loss from continuing operations of $16
million on sales of $870 million. These results included six key
items that together reduced income from continuing operations by
approximately $68 million, net of tax, or $1.09 per diluted share.
For the year-ago quarter, the company reported earnings from
continuing operations of $24 million on sales of $790 million.
There were four key items in the year-ago quarter that, on a
combined basis, reduced income from continuing operations by $25
million after tax, or $0.40 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
third quarter of fiscal 2017 was $0.83 per diluted share, versus
$0.78 per diluted share for the year-ago quarter. The prior-year
period included approximately $17 million of pension income and
approximately $6 million of stranded costs related to Valvoline
Inc. The net impact to adjusted EPS from these two items was
approximately $0.12 per diluted prior-year share and is included in
the prior-year adjusted EPS results.
Reportable
Segment Performance
To aid in the understanding of
Ashland's ongoing business performance, the results of Ashland's
reportable segments 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, adjusted EBITDA
margin and adjusted earnings per share, 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.
Following completion of the
distribution of Valvoline Inc. during the third quarter, Ashland's
operations are now managed within the following three reportable
segments: Specialty Ingredients, Composites, and Intermediates and
Solvents. In previous periods, Composites and Intermediates and
Solvents were reporting units included within the Ashland
Performance Materials reportable segment.
Specialty
Ingredients
Specialty Ingredients reported
sales of $591 million for the third quarter, a 7 percent increase
from prior year. Approximately six percentage points of this
increase, or $36 million, was driven by the successful completion
of the Pharmachem acquisition. The sales increase also was
supported by pricing and mix improvements for Ashland's value-added
products sold into the Consumer Specialties and Industrial
Specialties end markets. The Ashland team has made good progress in
offsetting increased raw material costs through disciplined pricing
plus price-to-value initiatives, and as a result maintained
consistent gross margins when compared to the prior year. With the
addition of approximately $7 million of EBITDA from Pharmachem in
the third quarter, total adjusted EBITDA increased 2 percent, to
$131 million, which was at the upper end of the outlook range.
Consumer Specialties sales and
volumes grew by 16 percent and 11 percent, respectively, compared
to the prior-year period. As previously noted, Pharmachem
contributed strongly to these overall results. Ashland's personal
care team reported a strong quarter, led by disciplined volume and
price execution within the oral and skin care end markets. In
pharma, positive mix led to improved margins, despite a slight
overall sales decline. Industrial Specialties' sales increased by 1
percent and volumes declined by 1 percent when compared to the
prior year. Recent softening of industry demand for architectural
coatings ingredients was more than offset by year-over-year sales
gains in energy.
For the fourth quarter, Specialty
Ingredients' sales are expected to be in the range of $590-$610
million, compared to $532 million in the year-ago quarter, as we
expect to continue gaining momentum through pricing initiatives.
Adjusted EBITDA is expected to be in the range of $135-$145
million, versus $126 million in the year-ago quarter. This outlook
includes the full contribution of fourth-quarter results from
Pharmachem and excludes sales of $9 million and EBITDA of $1
million from a joint venture in China, which primarily serves the
construction end market, that Ashland chose to exit. Also during
the quarter, year-over-year price increases are expected to be
greater than year-over-year raw material cost increases.
For fiscal 2017, Specialty
Ingredients expects adjusted EBITDA to be at the upper end of the
previously communicated range of $485-$500 million, reflecting the
continued progress in pricing initiatives and the strong earnings
contribution from Pharmachem.
Composites
Composites reported sales of $209
million for the third quarter, a 20 percent increase from prior
year. This was driven by a 10 percent increase in volumes resulting
from strong demand for our value-added products in North America
and Asia, as well as the addition of volumes from the facility in
Etain, France, that Ashland recently acquired from Reichhold. The
Etain facility contributed approximately three percentage points to
the sales increase with a small EBITDA contribution given the
timing of the acquisition. Disciplined pricing execution was
necessary to offset a sharp rise in raw material prices - namely
styrene - during the previous quarter. Composites reported adjusted
EBITDA of $27 million, a 17 percent increase over the prior-year
period.
For the fourth quarter of fiscal
2017, Composites expects sales to be in the range of $200-$210
million, reflecting continued volume growth, disciplined pricing
and a full-quarter contribution from the Etain composites facility,
compared to $162 million in the year-ago quarter. Adjusted EBITDA
is expected to be in the range of $20-$25 million, compared to $14
million in the year-ago quarter.
Intermediates and
Solvents (I&S)
I&S reported sales of $70
million for the third quarter, a 9 percent increase from prior
year. This strong growth was driven by the successful
implementation of price increases for butanediol (BDO), consistent
with improving global supply-demand dynamics. Mix also contributed
to year-over-year sales growth due to strong execution by the
I&S team. During the quarter, I&S reported adjusted EBITDA
of $10 million, a 43 percent increase over the prior-year
period.
For the fourth quarter of fiscal
2017, I&S expects sales to be in the range of $75-$85 million,
reflecting continued mix and price improvements, compared to $60
million in the year-ago quarter. Adjusted EBITDA is expected to be
in the range of $10-$15 million, compared to $3 million in the
year-ago quarter.
On a combined basis, in the third
quarter, the reported sales and adjusted EBITDA results for the
Composites and Intermediates and Solvents reportable segments
exceeded the outlook range provided at the beginning of the quarter
for the former Ashland Performance Materials reportable
segment.
Tax Rate
Ashland's effective tax rate for
the June 2017 quarter, after adjusting for key items, was 11
percent. The company currently expects the effective tax rate for
the fourth quarter to be in the range of 15-20 percent, driven
primarily by income mix and discrete items.
Pivot to
Premier
"As we enter the fourth quarter,
Ashland is squarely focused on delivering strong earnings growth in
the quarter and beyond. Our teams have made good progress in
offsetting higher raw-materials costs through successful
price-to-value initiatives and, as expected, our recent
acquisitions are already accretive to earnings," Wulfsohn said.
"In addition, looking out over the
longer term, we have established aggressive new financial targets
for fiscal 2018 through fiscal 2021. As outlined at Ashland's
Investor Day in New York City in early May, these targets are:
adjusted earnings per share growth (compound annual growth rate) of
at least 15 percent; adjusted EBITDA margins for Specialty
Ingredients of at least 25 percent, and cash generation of at least
$1 billion. This growth will be driven by seven core levers. These
levers include specific actions to sustain and grow Ashland's
premium mix, such as through new market strategies and successful
product introductions. The levers also include new initiatives to
improve our competitiveness, such as through better asset
utilization, price-to-value initiatives and cost management. We are
already making substantial progress toward executing on these
strategic levers and look forward to sharing updates as we move
forward. All of this will be against a backdrop of disciplined
capital investment. I am confident that we have the right team and
strategy in place to deliver against these commitments, which
should create significant value for shareholders and position
Ashland as the leading premier specialty chemicals company."
Conference Call
Webcast
Ashland will host a live webcast
of its third-quarter conference call with securities analysts at 9
a.m. EDT Wednesday, August 2, 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 nearly 7,000
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.
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. 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, 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 impact of acquisitions and/or divestitures
Ashland has made or may make, including the acquisition of
Pharmachem (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); the potential that
Ashland does not realize all of the expected benefits of the
separation of its Valvoline business; and severe weather, natural
disasters, cyber events and legal proceedings and claims (including
product recalls, 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. 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.
(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 Q3 2017 Earnings Prepared
Remarks
Ashland Q3 2017 Earnings Release Presentation
Ashland Q3 2017 Earnings Release & Financial Tables
Combined
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
Ashland (NYSE:ASH)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ashland (NYSE:ASH)
Historical Stock Chart
From Apr 2023 to Apr 2024