Ashland reports preliminary financial results for fourth quarter of fiscal 2019

• Sales of $609 million, down 9% versus prior-year quarter
• Net income of $411 million, or $6.71 per diluted share
• Income from continuing operations of $27 million, or $0.44 per diluted share
• Adjusted income from continuing operations of $47 million, or $0.77 per diluted share
• Adjusted EBITDA of $150 million 

COVINGTON, KENTUCKY, Nov. 18, 2019 (GLOBE NEWSWIRE) -- Ashland Global Holdings Inc. (NYSE: ASH), a premier global specialty materials company serving customers in a wide range of consumer and industrial markets, today announced preliminary¹ financial results for the fourth quarter of fiscal 2019 ended September 30, 2019.

Sales were $609 million, down 9 percent versus the prior-year quarter, driven primarily by challenged results at Pharmachem and Personal Care, plus weaker industrial end-market demand within the Specialty Ingredients segment. Income from continuing operations was $27 million, up $29 million versus the prior-year quarter, or $0.44 per diluted share, up $0.47 from the prior-year quarter. Adjusted income from continuing operations was $47 million, up 4 percent versus the prior-year quarter, or $0.77 per diluted share, up 8 percent from the prior-year quarter. Adjusted EBITDA was $150 million, up 6 percent versus the prior-year quarter due to lower selling, general and administrative (“SG&A”) costs primarily resulting from the ongoing cost-reduction program.

In fiscal year 2019, Ashland sales were $2.5 billion, down 4 percent versus the prior year. Net income was $505 million, up 343 percent versus the prior year, driven by lower costs from the cost-restructuring program. Operating income margins improved 280 basis points and operating income increased 6 percent when compared to fiscal year 2018.

Bill Wulfsohn, Ashland’s chairman and chief executive officer said, “During the quarter and fiscal year, we faced more challenging external conditions than anticipated. Despite these challenges, during fiscal year 2019 we took action to grow adjusted earnings per share by 14 percent, improve adjusted EBITDA margins by 140 basis points and increase adjusted EBITDA by 3 percent. These gains were primarily driven by the impact of Ashland’s $120 million cost-reduction program.”

He continued, “In addition, during the quarter we also completed the sale of the Composites business and Marl BDO facility while reducing debt by $940 million. The sale completes the company’s decade-long journey to become a pure-play specialty ingredients company.”

Regarding the recently announced leadership transition, Mr. Wulfsohn added, “I thank the Ashland team for their support and hard work which was essential to all we have accomplished over the past five years. Together we have created a premier specialty ingredients company. Now is the right time for a leadership change and I am confident that Guillermo Novo is the right chairman and CEO to lead the Ashland team on its journey to realize the company’s full potential.”

Guillermo Novo, current Ashland director and incoming chairman and CEO said, “I am incredibly excited to join the Ashland team and have already been hard at work. I want to thank Bill for all of his support during this transition and I look forward to sharing my initial thoughts on the journey ahead during our conference call with securities analysts tomorrow morning.”

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. In addition, EBITDA, or adjusted EBITDA, is reconciled to operating income in Table 5, free cash flow and adjusted operating income are reconciled in Table 7, and adjusted income from continuing operations and adjusted diluted earnings per share are reconciled in Table 8 of this news release. These adjusted results are considered non-GAAP financial measures.  For a full description of the non-GAAP financial measures used, see the “Use of Non-GAAP Measures” section that further describes these adjustments below.

Specialty Ingredients

Sales were $579 million, down 9 percent from the prior-year quarter, due to challenged results at Pharmachem and Personal Care, plus weaker industrial end-market demand. Unfavorable foreign currency reduced sales by 1 percent.

Operating income was $92 million, consistent with the prior-year quarter. Adjusted EBITDA was $152 million, down 5 percent from the prior-year quarter, as lower sales and gross profit were partially offset by lower SG&A costs.

Intermediates & Solvents

Sales were $30 million, down 3 percent from the prior-year quarter, due to changing market-demand dynamics.

Operating income was $6 million, consistent with the prior-year quarter. Adjusted EBITDA was $9 million, consistent with the prior-year quarter, as lower pricing was offset by favorable raw-material costs.

Unallocated & Other

Unallocated & other expense was $13 million, compared to $94 million in the prior-year quarter, primarily due to lower restructuring and environmental expenses. Adjusted unallocated & other expense was $13 million, compared to $28 million in the prior-year quarter, primarily due to lower costs from the ongoing cost-reduction program.

Fiscal Year 2019 Results Summary

During fiscal year 2019, Ashland generated sales of $2.5 billion, down 4 percent compared to the prior year. Strong results in Pharma and consistent results in Coatings and Adhesives were more than offset by the Colgate-Gantrez reformulation within Personal Care, challenges at Pharmachem and general weakness throughout the year in industrial end markets.

Net income was $505 million compared to $114 million in the prior fiscal year. Adjusted EBITDA was $532 million, up from $515 million in the prior year, driven by lower costs from the cost-restructuring program.

Outlook

Incoming Chairman and CEO Guillermo Novo will provide commentary on the outlook for Ashland during the conference call with securities analysts on Tuesday, November 19, 2019.

Conference Call Webcast
Ashland will host a live webcast of its fourth-quarter conference call with securities analysts at 9 a.m. EST Tuesday, November 19, 2019. The webcast will be accessible through Ashland’s website at http://investor.ashland.com and will include a slide presentation. Following the live event, an archived version of the webcast and supporting materials will be available for 12 months.

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, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income, operating income, net income margin and operating income margin. The adjustments Ashland makes to derive the non-GAAP measures of EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin exclude items which may cause short-term fluctuations in net income and operating income and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin provide disclosure on the same basis as that used by Ashland’s management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland’s historical operating performance and its business units and provide continuity to investors for comparability purposes. EBITDA margin and adjusted EBITDA margin are defined as EBITDA and adjusted EBITDA divided by sales for the corresponding period.

Key items, which are set forth on Table 8 of this release, are defined as financial effects from significant transactions that, either by their nature or amount, have caused short-term fluctuations in net income and/or operating income which Ashland does not consider to most accurately reflect Ashland’s underlying business performance and trends.  Further, Ashland believes that providing supplemental information that excludes the financial effects of these items in the financial results will enhance the investor’s ability to compare financial performance between reporting periods.

Tax-specific key items, which are set forth on Table 8 of this release, are defined as financial transactions, tax law changes or other matters that fall within the definition of key items as described above.  These items relate solely to tax matters and would only be recorded within the income tax caption of the Statement of Consolidated Income.  As with all key items, due to their nature, Ashland does not consider the financial effects of these tax-specific key items on net income to be the most accurate reflection of Ashland’s underlying business performance and trends.

The free cash flow metric enables Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, free cash flow includes the impact of capital expenditures from continuing operations, providing a more complete picture of cash generation. Free cash flow has certain limitations, including that it does not reflect adjustment for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.

Adjusted diluted earnings per share is a performance measure used by Ashland and is defined by Ashland as earnings (loss) from continuing operations, adjusted for identified key items and divided by the number of outstanding diluted shares of common stock.  Ashland believes this measure provides investors additional insights into operational performance by providing earnings and diluted earnings per share metrics that exclude the effect of the identified key items and tax specific key items.

About Ashland 
Ashland Global Holdings Inc. (NYSE: ASH) is a premier global specialty materials company serving customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, automotive, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. At Ashland, we are approximately 4,700 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. 

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. These statements include, but may not be limited to Ashland’s assessment on its progress towards becoming a premier specialty materials company; and its expectations regarding its ability to drive sales and earnings growth and realize further cost reductions.

Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the program to eliminate certain existing corporate and Specialty Ingredients expenses (including the possibility that such cost eliminations may not occur or may take longer to implement than anticipated), 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, cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); 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. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this news release whether as a result of new information, future events or otherwise.

¹Financial results are preliminary until Ashland’s Form 10-K is filed with the SEC

™ Trademark, Ashland or its subsidiaries, registered in various countries.

FOR FURTHER INFORMATION:

Investor Relations:                                                    Media Relations:
Seth A. Mrozek                                                         Joy Brock
+1 (302) 594-5010                                                     +1 (859) 815-3793
samrozek@ashland.com                                          jlbrock@ashland.com

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• Ashland Q4 2019 Earnings Release & Financial Tables Combined