Ashland Global Holdings Inc.
ASHLAND GLOBAL HOLDINGS INC (Form: 8-K, Received: 01/29/2018 18:11:29)

 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
______________
 
 
FORM 8-K
 
______________
 
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  January 29, 2018
 
ASHLAND GLOBAL HOLDINGS INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
(State or other jurisdiction of incorporation)
 

 
333-211719
 
 81-2587835
 
 
(Commission File Number) 
 
  (I.R.S. Employer Identification No.)
 
 
 
 
 
 

                                                                       
50 E. RiverCenter Boulevard
Covington, Kentucky 41011
Registrant’s telephone number, including area code (859) 815-3333
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[  ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[  ] 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[  ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[  ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company   [  ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]
 


Item 2.02 .   Results of Operations and Financial Condition

On January 29, 2018, Ashland Global Holdings Inc. (“Ashland”) announced preliminary first quarter results, which are discussed in more detail in the news release (the “News Release”) attached to this Current Report on Form 8-K (“Form 8-K”) as Exhibit 99.1, which is incorporated herein by reference into this Item 2.02.

Item 7.01.    Regulation FD Disclosure

On January 29, 2018, Ashland will make available the News Release and a slide presentation on the “Investor Center” section of Ashland’s website located at http://investor.ashland.com.  A copy of the slide presentation is attached to this Form 8-K as Exhibit 99.2, and is incorporated herein by reference solely for purposes of this Item 7.01 disclosure.

Item 9.01 .   Financial Statements and Exhibits
 
 
 (d)
 
Exhibits
 
 
     
   
In connection with the disclosures set forth in Items 2.02 and 7.01 above, the information in this Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Form 8-K, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Form 8-K will not be deemed an admission as to the materiality of any information in this Form 8-K that is required to be disclosed solely by Regulation FD.

 
 
 
2

SIGNATURES
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ASHLAND GLOBAL HOLDINGS INC.
 
(Registrant)
 
 
 
 
January 29, 2018
 /s/ J. Kevin Willis
 
J. Kevin Willis
 
Senior Vice President and
Chief Financial Officer
 
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EXHIBIT 99.1
  News Release


Ashland reports preliminary financial results for first quarter of fiscal 2018 in line with guidance
Company continues building momentum with broad-based growth in sales and adjusted earnings; reaffirms full-year outlook for all operating segments in fiscal 2018

COVINGTON, KENTUCKY, January 29, 2018 – 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 first quarter of fiscal 2018:

Sales grew 20 percent year-over-year to $842 million.
Reported net loss was $4 million, while loss from continuing operations was $7 million, or $0.12 per diluted share;
On an adjusted basis, income from continuing operations was $27 million, or $0.42 per diluted share. Due primarily to tax reform enacted in late December, Ashland’s effective tax rate for the quarter was 18 percent, compared to its estimate of 10 percent provided in early November. The tax rate change reduced adjusted earnings by $0.04 per share.
Adjusted EBITDA was $136 million. 

“In the first quarter, the Ashland team made an important step forward to build the momentum needed to deliver on our fiscal 2018 commitments,” said William A. Wulfsohn, Ashland chairman and chief executive officer.

“Each of our three operating segments generated organic sales and adjusted EBITDA growth. Our Specialty Ingredients team generated solid top-line results across numerous end markets – including personal care, pharmaceuticals and coatings – driven by targeted product mix enhancements. Pharmachem also made an important contribution during the quarter. Within Composites, the team turned in another strong performance, with volume/mix improvements and continued pricing discipline in the face of higher raw-material costs. In addition, the manufacturing facility we acquired in France last year continues to perform well. Within Intermediates and Solvents, the team delivered a 30 percent increase in sales through higher butanediol pricing and healthy global demand.”

Reportable Segment Performance and Outlook
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.  In addition, free cash flow is reconciled in Table 6 and adjusted earnings per share is reconciled in Table 8 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
 
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filed with the Securities and Exchange Commission in conjunction with this earnings release.) In addition, although Ashland provides forward-looking guidance for adjusted EBITDA, free cash flow 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 that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty.

Specialty Ingredients
·
Sales increased 14 percent, to $550 million, driven primarily by the contribution from Pharmachem and strong product mix across key end markets. Year-over-year sales to Personal Care, Pharma and Coatings customers grew 5 percent, 4 percent and 12 percent, respectively. Favorable currency contributed 2 percentage points to the top-line growth. Gross profit increased 13 percent.
·
Selling, General and Administrative (SG&A) costs increased 14 percent, driven almost entirely by the Pharmachem acquisition and foreign currency. 
·
Adjusted EBITDA rose 11 percent to $105 million, driven by both Pharmachem and growth in the balance of the business.
 
Composites
·
Sales climbed 32 percent, to $218 million, as the team generated strong organic growth from continued pricing discipline through an ongoing focus on commercial excellence and value selling, as well as business growth in North America and Europe.
·
Adjusted EBITDA grew 10 percent, to $23 million.
 
Intermediates & Solvents
·
Sales increased 30 percent, to $74 million, driven by strong pricing, favorable costs and continued healthy market demand.
·
Adjusted EBITDA in the quarter was $16 million.
 
Balance Sheet and Cash Flow
·
Total debt was $2.9 billion.
·
Net debt was $2.3 billion.
·
During the quarter, cash used by operating activities from continuing operations totaled $24 million compared to $60 million in the prior-year period.
·
Free cash flow was ($48) million compared to ($93) million in the prior year. These figures include $23 million in restructuring costs in the first quarter of fiscal 2018, and $29 million in the year-ago period.

Outlook
Ashland today reaffirmed its full-year adjusted EBITDA estimates for each of its operating segments in fiscal 2018. The company also reiterated its outlook for more than $220 million in free cash flow in fiscal 2018. Due to the change in the company’s effective tax rate for
 
 
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fiscal 2018, Ashland has updated its adjusted earnings outlook for the year to a range of $2.90 - $3.10 per share. Ashland’s expected cash tax range remains unchanged. Please see the table below for additional details related to the company’s fiscal 2018 financial outlook. 

 
Original FY2018 Outlook
Updated
Adjusted EBITDA
   
-   Specialty Ingredients
$560 - $590 million
No change
-   Composites
$85 - $95 million
No change
-   Intermediates & Solvents
$40 - $50 million
No change
-   Unallocated and other
($35 - $45 million)
No change
     
Key Operating Metrics
   
-   Free cash flow
>$220 million
No change
-   Adjusted earnings per share (EPS)
$3.20 - $3.40
$2.90 - $3.10*
       
Corporate Items
     
-   Depreciation & amortization
~$290 million
No change
-   Interest expense
$125 - $135 million
No change
-   Effective tax rate
8 - 13% 16 - 20%
-   Capital expenditures
$195 - $205 million
No change
-   Diluted share count
~64 million
No change
*Due primarily to recently enacted tax reform, Ashland is raising its estimated effective tax rate range for fiscal 2018 to 16 - 20%, compared to the original outlook of 8 – 13%. Higher tax rate is expected to reduce fiscal 2018 adjusted earnings by approximately $0.30 per diluted share.

For the second quarter of fiscal 2018, Ashland expects adjusted earnings in the range of $0.80-$0.90 per diluted share, compared to $0.70 in the prior-year period. This estimate assumes an effective tax rate of 18 percent based on the new U.S. tax legislation.

“As outlined at our Investor Day last year, Ashland has a clear strategy to drive strong sales and earnings growth in fiscal 2018 and beyond.  Over the past year, we have taken specific actions to sustain and grow Ashland’s premium mix while also improving our competitiveness. Our performance in the first quarter reflects important progress.  All three of our operating segments remain on track to deliver on their key financial targets this year. We have more work to do on industrial pricing and accelerating organic growth, but momentum is clearly building. Fiscal 2018 is an important year for Ashland and we remain committed to delivering results,” Wulfsohn said.

For additional information on Ashland’s first-quarter financial results, please see the slide presentation accompanying this news release. 

Conference Call Webcast
Ashland will host a live webcast of its first-quarter conference call with securities analysts at 9 a.m. EST Tuesday, January 30, 2018. 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.
 
 
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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.

Adjusted 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 the earnings per share metric that excludes the effect of the identified key items.

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 approximately 6,500 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
 
 
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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; the potential that the Tax Cuts and Jobs Act enacted on December 22, 2017, will have a negative impact on Ashland’s financial results; 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.

™ 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  
 
 
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Ashland Global Holdings Inc. and Consolidated Subsidiaries
       
Table 1
 
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
           
(In millions except per share data - preliminary and unaudited)
           
             
   
Three months ended
 
   
December 31
 
   
2017
   
2016
 
             
Sales
 
$
842
   
$
704
 
Cost of sales
   
613
     
515
 
GROSS PROFIT
   
229
     
189
 
Selling, general and administrative expense
   
171
     
157
 
Research and development expense
   
21
     
20
 
Equity and other income
   
2
     
3
 
OPERATING INCOME
   
39
     
15
 
Net interest and other financing expense
   
31
     
122
 
Other net periodic benefit income
   
-
     
2
 
Net loss on divestitures
   
1
     
1
 
INCOME (LOSS) FROM CONTINUING OPERATIONS
               
BEFORE INCOME TAXES
   
7
     
(106
)
Income tax expense (benefit)
   
14
     
(41
)
LOSS FROM CONTINUING OPERATIONS
   
(7
)
   
(65
)
Income from discontinued operations (net of taxes)
   
3
     
75
 
NET INCOME (LOSS)
   
(4
)
   
10
 
Net income attributable to noncontrolling interest
   
-
     
11
 
NET LOSS ATTRIBUTABLE TO ASHLAND
 
$
(4
)
 
$
(1
)
                 
DILUTED EARNINGS PER SHARE
               
Loss from continuing operations
 
$
(0.12
)
 
$
(1.05
)
Income from discontinued operations attributable to Ashland
   
0.05
     
1.04
 
Net loss attributable to Ashland
 
$
(0.07
)
 
$
(0.01
)
                 
                 
AVERAGE DILUTED COMMON SHARES OUTSTANDING (a)
   
62
     
62
 
                 
SALES
               
Specialty Ingredients
 
$
550
   
$
482
 
Composites
   
218
     
165
 
Intermediates and Solvents
   
74
     
57
 
   
$
842
   
$
704
 
                 
OPERATING INCOME (LOSS)
               
Specialty Ingredients
 
$
42
   
$
40
 
Composites
   
18
     
15
 
Intermediates and Solvents
   
8
     
(7
)
Unallocated and other
   
(29
)
   
(33
)
   
$
39
   
$
15
 

(a)   As a result of the loss from continuing operations, the effect of the share-based awards convertible to common shares would be anti-dilutive.  In accordance with U.S. GAAP, they have been excluded from the diluted earnings per share calculation. 




 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
       
Table 2
 
CONDENSED CONSOLIDATED BALANCE SHEETS
           
(In millions - preliminary and unaudited)
           
             
   
December 31
   
September 30
 
   
2017
   
2017
 
ASSETS
           
Current assets
           
Cash and cash equivalents
 
$
601
   
$
566
 
Accounts receivable
   
597
     
612
 
Inventories
   
674
     
634
 
Other assets
   
92
     
91
 
Total current assets
   
1,964
     
1,903
 
                 
Noncurrent assets
               
Property, plant and equipment
               
Cost
   
3,795
     
3,762
 
Accumulated depreciation
   
1,850
     
1,792
 
Net property, plant and equipment
   
1,945
     
1,970
 
                 
Goodwill
   
2,475
     
2,465
 
Intangibles
   
1,298
     
1,319
 
Restricted investments
   
315
     
302
 
Asbestos insurance receivable
   
205
     
209
 
Deferred income taxes
   
28
     
28
 
Other assets
   
425
     
422
 
Total noncurrent assets
   
6,691
     
6,715
 
                 
Total assets
 
$
8,655
   
$
8,618
 
                 
LIABILITIES AND EQUITY
               
Current liabilities
               
Short-term debt
 
$
355
   
$
235
 
Trade and other payables
   
382
     
409
 
Accrued expenses and other liabilities
   
266
     
324
 
Total current liabilities
   
1,003
     
968
 
                 
Noncurrent liabilities
               
Long-term debt
   
2,584
     
2,584
 
Asbestos litigation reserve
   
676
     
694
 
Deferred income taxes
   
390
     
375
 
Employee benefit obligations
   
194
     
191
 
Other liabilities
   
409
     
400
 
Total noncurrent liabilities
   
4,253
     
4,244
 
                 
Stockholders' equity
   
3,399
     
3,406
 
                 
Total liabilities and stockholders' equity
 
$
8,655
   
$
8,618
 
 




 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
       
Table 3
 
STATEMENTS OF CONSOLIDATED CASH FLOWS
           
(In millions - preliminary and unaudited)
           
       
Three months ended
 
       
December 31
 
     
2017
   
2016
 
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
           
  FROM CONTINUING OPERATIONS
           
Net income (loss)
 
$
(4
)
 
$
10
 
Income from discontinued operations (net of taxes)
   
(3
)
   
(75
)
Adjustments to reconcile income from continuing operations to
               
  cash flows from operating activities
               
Depreciation and amortization
   
79
     
68
 
Original issue discount and debt issuance cost amortization
   
2
     
94
 
Deferred income taxes
   
8
     
2
 
Stock based compensation expense
   
7
     
5
 
Gain on early retirement of debt
   
-
     
(3
)
Realized gain and investment income on available-for-sale securities
   
(3
)
   
(3
)
Net loss on divestitures
   
1
     
1
 
Pension contributions
   
(2
)
   
(1
)
Gain on post-employment plan remeasurement
   
-
     
(2
)
Change in operating assets and liabilities   (a)
   
(109
)
   
(156
)
Total cash used by operating activities from continuing operations
   
(24
)
   
(60
)
                   
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
               
  FROM CONTINUING OPERATIONS
               
Additions to property, plant and equipment
   
(24
)
   
(33
)
Proceeds from disposal of property, plant and equipment
   
1
     
-
 
Proceeds from sale of operations
   
1
     
-
 
Net purchase of funds restricted for specific transactions
   
(5
)
   
(2
)
Reimbursements from restricted investments
   
5
     
-
 
Proceeds from sales of available-for-sale securities
   
5
     
-
 
Purchases of available-for-sale securities
   
(5
)
   
-
 
Proceeds from the settlement of derivative instruments
   
-
     
4
 
Payments from the settlement of derivative instruments
   
(2
)
   
-
 
Total cash used by investing activities from continuing operations
   
(24
)
   
(31
)
                   
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
               
  FROM CONTINUING OPERATIONS
               
Repayment of long-term debt
   
(2
)
   
(239
)
Premium on long-term debt repayment
   
-
     
(5
)
Proceeds (repayment) from short-term debt
   
120
     
(154
)
Debt issuance costs
   
-
     
(4
)
Cash dividends paid
   
(14
)
   
(24
)
Stock based compensation employee withholding taxes paid in cash
   
(5
)
   
(8
)
Total cash provided (used) by financing activities from continuing operations
   
99
     
(434
)
CASH PROVIDED (USED) BY CONTINUING OPERATIONS
   
51
     
(525
)
Cash provided (used) by discontinued operations
               
Operating cash flows
   
(16
)
   
70
 
Investing cash flows
   
-
     
(10
)
Financing cash flows
   
-
     
(10
)
Effect of currency exchange rate changes on cash and
               
cash equivalents
   
-
     
(9
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
   
35
     
(484
)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
   
566
     
1,017
 
Change in cash and cash equivalents held by Valvoline
   
-
     
(65
)
CASH AND CASH EQUIVALENTS - END OF PERIOD
 
$
601
   
$
468
 
                   
DEPRECIATION AND AMORTIZATION
               
Specialty Ingredients
 
$
62
   
$
55
 
Composites
   
5
     
6
 
Intermediates and Solvents
   
8
     
7
 
Unallocated and other
   
4
     
-
 
       
$
79
   
$
68
 
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
               
Specialty Ingredients
 
$
19
   
$
26
 
Composites
   
3
     
2
 
Intermediates and Solvents
   
1
     
3
 
Unallocated and other
   
1
     
2
 
   
$
24    
$
33  
 
(a)    
Excludes changes resulting from operations acquired or sold.
               
 






 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
         
Table 4
 
INFORMATION BY INDUSTRY SEGMENT
             
(In millions - preliminary and unaudited)
             
                   
     
Three months ended
 
     
December 31 
     
2017 
 
2016 
SPECIALTY INGREDIENTS
             
 
Sales per shipping day
$
9.0
   
$
7.9
 
 
Metric tons sold (thousands)
 
73.0
     
72.6
 
 
Gross profit as a percent of sales (a)
 
31.5
   
32.0
%
COMPOSITES
             
 
Sales per shipping day
$
3.6
   
$
2.7
 
 
Metric tons sold (thousands)
 
91.2
     
78.4
 
 
Gross profit as a percent of sales (a)
 
18.4
   
 21.1
INTERMEDIATES AND SOLVENTS
             
 
Sales per shipping day
$
1.2
   
$
0.9
 
 
Metric tons sold (thousands)
 
32.7
     
32.2
 
 
Gross profit as a percent of sales (a)
 
21.3
   
 (0.9)
 
(a)   Gross profit as a percent of sales is defined as sales, less cost of sales divided by sales.
 

 
 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries  
               
Table 5
 
RECONCILIATION OF NON-GAAP DATA - INCOME (LOSS) FROM CONTINUING OPERATIONS
         
(In millions - preliminary and unaudited)
                   
                     
  Three Months Ended December 31, 2017  
  Specialty     Intermediates   Unallocated      
  Ingredients   Composites   and Solvents   & Other   Total  
OPERATING INCOME (LOSS)
                 
Separation and restructuring costs
 
$
(3
)  
$
-
   
$
-
   
$
(11
)  
$
(14
)
Environmental reserve adjustments     -       -       -       (11 )     (11 )
All other operating income (loss)
   
45
     
18
     
8
     
(7
)    
64
 
Operating income (loss)
   
42
     
18
     
8
     
(29
)
   
39
 
                                         
NET INTEREST AND OTHER FINANCING EXPENSE
                      31       31  
                                         
NET LOSS ON DIVESTITURES
                            1       1  
                                         
INCOME TAX EXPENSE (BENEFIT)
                                       
Key items
                           
(7
)
   
(7
)
Discrete items                             16       16  
All other income tax expense
                           
5
     
5
 
                             
14
     
14
 
INCOME (LOSS) FROM CONTINUING OPERATIONS
 
$
42
   
$
18
   
$
8
   
$
(75
)
 
$
(7
)
                                         
                                         
  Three Months Ended December, 31, 2016  
    Specialty           Intermediates   Unallocated          
  Ingredients   Composites   and Solvents   & Other   Total  
OPERATING INCOME (LOSS)
                                       
Separation costs   $ -     $ -     $ -     $ (22 )   $ (22 )
Legal reserve
   
-
     
-
     
-
     
(5
)
   
(5
)
All other operating income (loss)
   
40
     
15
     
(7
)    
(6
)    
42
 
Operating income (loss)
   
40
     
15
     
(7
)    
(33
)
   
(15
)
                                         
NET INTEREST AND OTHER FINANCING EXPENSE
                                       
Financing costs                             92       92  
All other interest and other financing expense                             30       30  
                                         
OTHER NET PERIODIC BENEFIT INCOME                             2       2  
                                         
NET LOSS ON DIVESTITURES
                           
1
     
1
 
                                         
INCOME TAX EXPENSE (BENEFIT)
                                       
Key items
                           
(44
)
   
(44
)
Discrete items                             1       1  
All other income tax expense
                           
2
     
2
 
                             
(41
)
   
(41
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
 
$
40
   
$
15
   
$
(7
)  
$
(113
)
 
$
(65
)

 
 

 
 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
       
Table 6
 
RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOW
           
(In millions - preliminary and unaudited)
           
             
 
Three months ended
 
 
December 31
 
Free cash flow (a)
2017
      2016  
Total cash flows used by operating activities
           
from continuing operations
 
$
(24
)
 
$
(60
)
Adjustments:
               
Additions to property, plant and equipment
   
(24
)
   
(33
)
Free cash flows
 
$
(48
)
 
$
(93
)
                 
(a)   
Free cash flow is defined as cash flows provided (used) by operating activities less additions to property, plant and equipment and other items Ashland has deemed non operational (if applicable).

 

 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
       
Table 7
 
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
           
(In millions - preliminary and unaudited)
           
             
   
Three months ended
 
   
December 31
 
Adjusted EBITDA - Ashland Global Holdings Inc.
 
2017
   
2016
 
Net income (loss)
 
$
(4
)
 
$
10
 
Income tax expense (benefit)
   
14
     
(41
)
Net interest and other financing expense
   
31
     
122
 
Depreciation and amortization (a)
   
73
     
68
 
EBITDA
   
114
     
159
 
Income from discontinued operations (net of taxes)
   
(3
)
   
(75
)
Gain on post-employment plan remeasurement
   
-
     
(2
)
Operating key items (see Table 5)
   
25
     
27
 
Adjusted EBITDA
 
$
136
   
$
109
 
                 
                 
Adjusted EBITDA - Specialty Ingredients
               
Operating income
 
$
42
   
$
40
 
Add:
               
Depreciation and amortization (a)
   
60
     
55
 
Key items (see Table 5)
   
3
     
-
 
Adjusted EBITDA
 
$
105
   
$
95
 
                 
                 
Adjusted EBITDA - Composites
               
Operating income
 
$
18
   
$
15
 
Add:
               
Depreciation and amortization
   
5
     
6
 
Key items (see Table 5)
   
-
     
-
 
Adjusted EBITDA
 
$
23
   
$
21
 
                 
                 
Adjusted EBITDA - Intermediates and Solvents
               
Operating income (loss)
 
$
8
   
$
(7
)
Add:
               
Depreciation and amortization
   
8
     
7
 
Key items (see Table 5)
   
-
     
-
 
Adjusted EBITDA
 
$
16
   
$
-
 
 
(a)   
Depreciation and amortization excludes accelerated depreciation of $4 million for Unallocated and other and $2 million for Specialty Ingredients for the three months ended December 31, 2017.  
 

 
 
Ashland Global Holdings Inc. and Consolidated Subsidiaries
     
Table 8
 
RECONCILIATION OF OTHER NON-GAAP DATA
         
(Preliminary and unaudited)
         
 
Three months ended
 
 
December 31
 
 
2017
   
2016
 
Diluted EPS from continuing operations (as reported)
 
$
(0.12
)
 
$
(1.05
)
Adjustments:
               
Separation and restructuring costs
   
0.17
     
0.25
 
Environmental reserve adjustments
   
0.13
     
-
 
Gain on post-employment plan remeasurement
   
-
     
(0.02
)
Legal reserve
   
-
     
0.04
 
Debt refinancing costs
   
-
     
0.90
 
Tax discrete items
   
0.24
     
0.02
 
Total adjustments
   
0.54
     
1.19
 
Adjusted diluted EPS from continuing operations (non-GAAP)
 
$
0.42
   
$
0.14
 
                 
                 
 
Three months ended
 
 
December 31
 
     
2017
     
2016
 
Operating income
 
$
39
   
$
15
 
Key items
   
25
     
27
 
Adjusted operating income
 
$
64
   
$
42
 
                 
                 
 
Three months ended
 
 
December 31
 
     
2017
     
2016
 
Loss from continuing operations
 
$
(7
)
 
$
(65
)
Key items
   
34
     
74
 
Adjusted income from continuing operations
 
$
27
   
$
9
 


EXHIBIT 99.2
 First-Quarter Fiscal 2018 Earnings  January 29, 2018  / efficacy usability allure integrity profitability 
 

 Forward-Looking StatementsThis presentation 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; the potential that the Tax Cuts and Jobs Act enacted on December 22, 2017 will have a negative impact on Ashland’s financial results, 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 presentation 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 presentation.Regulation G: Adjusted ResultsThe information presented herein regarding certain unaudited adjusted results does not conform to generally accepted accounting principles in the United States (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Ashland has included this non-GAAP information to assist in understanding the operating performance of the company and its reportable segments. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information related to previous Ashland filings with the SEC has been reconciled with reported U.S. GAAP results. Although Ashland provides forward-looking guidance for adjusted EBITDA, adjusted EPS and free cash flow, 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.  2 
 

 First Quarter Summary 
 

       Ashland Global Holdings Inc.Adjusted Results Summary1  4  HighlightsSales up 20% including 9 ppts from acquisitions/divestitures and 3 ppts from currencyReported net loss of $4 million; loss from continuing operations of $7 million or $0.12 per diluted shareEBITDA increased to $136 millionEPS equaled $0.42 (includes ~$0.04 negative impact from change in the tax rate)Excl. intangible amortization, adjusted EPS would have been $0.71Key DriversAll three reportable segments show organic year-over-year (YOY) improvements in sales and EBITDASG&A growth driven largely by the impact of acquisition/divestiture and currency18% effective tax rate driven primarily by new US corporate tax legislation  Ashland’s earnings release dated January 29, 2018, available on Ashland’s website at http://investor.ashland.com, reconciles adjusted amounts to amounts reported under GAAP. Includes approximately 1 million of diluted shares for both periods that were excluded from the U.S. GAAP EPS calculation since there was a loss from continuing operations. 
 

   Specialty IngredientsAdjusted Results Summary1  HighlightsSales up 14% including 10 ppts from acquisitions/divestitures and 2 ppts from currencyGross profit up 13% including 8 ppts from acquisitions/divestitures and 3 ppts from currencyKey DriversYOY EBITDA Impact:$9 million from volume/mix gains from focus on enhanced organic product mix across key end markets$7 million decline in price vs. cost driven by higher than expected raw-material costs, primarily in industrial end markets, partially offset by new pricing programs$1 million favorable SG&A (excluding the impact of acquisitions/divestitures and currency) due to cost discipline$3 million benefit from favorable currency$4 million positive net contribution from acquisitions/divestitures2; Pharmachem results remain on track for FY 2018      5  Ashland’s earnings release dated January 29, 2018, available on Ashland’s website at http://investor.ashland.com, reconciles adjusted amounts to amounts reported under GAAP. Includes Pharmachem acquisition, construction China JV divestiture, and related corporate cost allocations. 
 

     Specialty IngredientsSales Trends by End Market  6  End Market CommentaryBroad-based growth across end markets driven by targeted product mix enhancementsStrong growth in Personal Care biofunctional ingredientsNew capacity enables robust volumes in key Pharma cellulosic excipientsAdhesives sales flat but increased pricingCoatings growth led by key customer wins and favorable order patternsSeasonally slow quarter for PharmachemGrowth in Nutrition & Other driven by focused asset utilization initiativesCurrency contributed 2 percentage points to sales growth2  Performance SpecialtiesAverage USD / EUR of $1.18 in current quarter compared to $1.08 in prior-year period. 
 

   CompositesAdjusted Results Summary1  Ashland‘s earnings release dated January 29, 2018, available on Ashland's website at http://investor.ashland.com, reconciles adjusted amounts to amounts reported under GAAP.  7  HighlightsSales up 32% including 10 ppts from acquisitions and 4 ppts from currencyEBITDA up 10%Key Drivers$4 million of EBITDA growth from volume, mix and margin driven by strong growth in all key end markets, particularly in North America and EuropeContinued pricing discipline through focus on commercial excellence and value selling$4 million unfavorable SG&A due to reallocation of corporate costs     
 

   Intermediates & SolventsAdjusted Results Summary1  Ashland‘s earnings release dated January 29, 2018, available on Ashland's website at http://investor.ashland.com, reconciles adjusted amounts to amounts reported under GAAP.  8  HighlightsSales up 30%EBITDA increased to $16 millionEBITDA margin increased to 21.6%Key Drivers$16 million of EBITDA growth from volume, mix and margin driven by higher BDO prices YOY and customer wins in derivativesMarket demand remains healthy across all regionsCatalyst change at Lima, Ohio facility in prior-year period     
 

 Outlook Summary 
 

   Ashland Global Holdings Inc.Impact of New Tax Law  HighlightsReset FY 2018 book effective tax rate (ETR) to a range of 16 – 20%FY 2018 Adjusted EPS outlook based on 18% rateCash tax rate (CTR) expected to be in the current range of 20 – 25%Cash cost of ~$160 million for mandatory repatriation; offset by lower deferred tax liabilities of ~$126 millionFY 2018 targeted cash repatriation of ~$500 million, of which ~$300 million used for debt reduction thus far in fiscal-second quarter 2018Additional InformationLower US corporate tax rate effective for Ashland in FY 2018Other key provisions do not apply until FY 2019 (e.g., interest expense disallowance, 100% expensing of certain capital expenditures, and new international tax rules)Lower US corporate tax rate increases Ashland’s ETR as a result of the reduction to the ETR benefit of our US book lossTransition to territorial tax system will “unlock” our foreign cash going forwardWe plan to provide an update on additional impacts to FY 2019 ETR and CTR later in the year  10 
 

       Ashland Global Holdings Inc.Fiscal Year 2018 Outlook  11  Definition of free cash flow: operating cash flow less capital expenditures and other items Ashland has deemed non-operational (if applicable).  HighlightsReaffirm all operating segment Adjusted EBITDA outlooksReaffirm FY free cash flow outlook1Update FY Adj. EPS range by $0.30 due to tax rate change 
 

   HighlightsExpect Q2 adjusted EPS in the range of $0.80 - $0.90 vs. $0.70 prior yearOutlook based on effective tax rate of 18% vs. 1% prior yearKey DriversStrong YOY organic sales and EBITDA growth in Specialty Ingredients, Composites and Intermediates & Solvents (I&S)Continued contribution from recent acquisitions consistent with expectationsPlanned I&S plant turnaround results in ~$5 million of incremental YOY cost for the segment  Ashland Global Holdings Inc.Second-Quarter Fiscal 2018 Outlook  12 
 

 Appendix A: Key Items and Balance Sheet 
 

   Fiscal First Quarter – Continuing OperationsKey Items Affecting Income      14 
 

   Liquidity and Net Debt    ($ in millions)      15 
 

 Appendix B: Business Profiles  12 Months Ended December 31, 2017 
 

 Corporate Profile  By business unit  By geography  1 For 12 months ended December 31, 2017.2 Ashland includes only U.S. and Canada in its North America designation.  North America240%  Asia Pacific18%  LatinAmerica/Other - 9%  Europe 33%    SpecialtyIngredients67%  Intermediates and Solvents8%  Composites25%  Sales1 - $3.4 Billion  17   
 

 Corporate Profile  For 12 months ended December 31, 2017. See Appendix C for reconciliation to amounts reported under GAAP.  NYSE Ticker Symbol:  ASH  Total Employees:  ~6,500   Outside North America  ~50%  Number of Countries in Which Ashland Has Sales:  More than 100  SpecialtyIngredients79%  Intermediates and Solvents7%  Adjusted EBITDA1 - $597 Million  18   
 

 Specialty Ingredients  Salesby Market2  For 12 Months Ended December 31, 2017Sales: $2.3 billionAdjusted EBITDA: $504 million1Adjusted EBITDA Margin: 22.1%1  Salesby Product  Cellulosics 35%  PVP17%  Adhesives 15%  North America 40%  AsiaPacific 19%  Europe 31%  Latin America/Other – 10%  Actives – 6%  Vinyl Ethers6%  Salesby Geography3  19  A global leader of cellulose ethers, vinyl pyrrolidones and biofunctionals  Pharmachem3 7%  Pharmachem3 7%  1 See Appendix C for reconciliation to amounts reported under GAAP.2 Within the Sales by Market chart above, Industrial Specialties are presented in green and Consumer Specialties are presented in blue.3 Includes Pharmachem’s sales for the period May 17, 2017 through December 31, 2017, the period for which Pharmachem was owned. 
 

 Composites  Salesby Geography  For 12 Months Ended December 31, 2017Sales: $832 millionAdjusted EBITDA: $91 million1Adjusted EBITDA Margin: 10.9%1  Salesby Product  UPR/VER284%  Gel coats and other16%  Construction: Residential19%  Marine 22%  Construction:Industrial40%  Salesby Market  North America46%  Asia Pacific – 14%  Europe32%  Latin America/Other 8%  Transportation 11%  Construction: Infrastructure 8%  1 See Appendix C for reconciliation to amounts reported under GAAP.2 UPR stands for unsaturated polyester resins and VER stands for vinyl ester resins.  20  A global leader in unsaturated polyester resins, vinyl ester resins and gel coats 
 

 Intermediates and Solvents  Salesby Geography  For 12 Months Ended December 31, 2017Sales: $283 millionAdjusted EBITDA: $41 million1Adjusted EBITDA Margin: 14.5%1  Salesby Product  Butanediol39%  Derivatives61%  GeneralIndustrial 27%  Plastics/Polymers32%  Salesby Application  North America 22%  Asia Pacific 18%  Europe 57%  Latin America/Other 3%  1 See Appendix C for reconciliation to amounts reported under GAAP.  21  A global leader in butanediol and related derivatives  Pharma 16%  Agriculture7% 
 

 Appendix C: Non-GAAP Reconciliation1  Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, 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 Global Holdings Inc. and Consolidated SubsidiariesReconciliation of Non-GAAP Data for 12 Months Ended December 31, 2017  North America2__%  Asia Pacific__%  LatinAmerica/Other - _%  Europe __%  AshlandSpecialtyIngredients__%  AshlandPerformanceMaterials__%  Valvoline__%  1 Quarterly totals may not sum to actual results due to quarterly rounding conventions. Calculation of adjusted EBITDA for each quarter has been reconciled within certain financial filings with the SEC and posted on Ashland's website for each reportable segment.   23 
 

 ® Registered trademark, Ashland or its subsidiaries, registered in various countries™ Trademark, Ashland or its subsidiaries, registered in various countries