false 0001674862 0001674862 2020-11-10 2020-11-10

 

 

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):  November 10, 2020

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.)

 

8145 Blazer Drive

Wilmington, DE 19808

Registrant’s telephone number, including area code (302) 995-3000

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.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock (par value $.01)		ASH		NYSE

 

 

 

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Item 2.02.  Results of Operations and Financial Condition

 

On November 10, 2020, Ashland Global Holdings Inc. (“Ashland”) announced preliminary fourth 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 November 10, 2020, Ashland will make available the News Release on the “Investor Center” section of Ashland’s website located at http://investor.ashland.com.  

 

Item 9.01.  Financial Statements and Exhibits

 

	(d)	Exhibits
	99.1	News Release dated November 10, 2020.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL Document).

 

In connection with the disclosures set forth in Items 2.02 and 7.01 above, the information in this Form 8-K, including the exhibit 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 exhibit, 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.

 

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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)
November 10, 2020	/s/ J. Kevin Willis
	J. Kevin Willis
	Senior Vice President and Chief Financial Officer

 

3

 

Exhibit 99.1

 

 

Ashland reports preliminary financial results for fourth quarter of fiscal year 2020

 

 

WILMINGTON, Del., November 10, 2020 – Ashland Global Holdings Inc. (NYSE: ASH) today announced preliminary¹ financial results for the fourth quarter of fiscal year 2020 which ended September 30, 2020. The global specialty materials company serves customers in a wide range of consumer and industrial markets.

 

Ashland’s financial results during the quarter reflected both strong resiliency in demand and the positive impact of significant self-directed actions to reduce costs and right-size inventory levels. Sales were approximately $609 million, flat compared to the prior-year period and six percent greater than the June quarter, driven by continued strength in Consumer Specialties and improving demand within Industrial Specialties.

 

Net income was $5 million compared to net income of $411 million in the prior-year quarter, as the prior year included earnings and gains from the Composites and Marl businesses. Income from continuing operations was zero compared to income of $27 million in the prior-year quarter, or zero per diluted share compared to $0.44 in the prior-year quarter. Adjusted income from continuing operations excluding intangibles amortization expense was $76 million compared to $64 million in the prior-year quarter, or $1.25 per diluted share, up from $1.03 in the prior-year quarter. Adjusted EBITDA was $154 million, up from $150 million in the prior-year quarter, driven primarily by lower operating expenses and improved product mix in both the Consumer Specialties and Industrial Specialties segments.

 

Cash flows provided by operating activities totaled $160 million compared to $135 million in the prior-year quarter. Free cash flows totaled $116 million compared to $83 million in the prior-year quarter, driven primarily by increased earnings and the Company’s efforts to reduce overall inventory levels by $99 million, partially offset by $11 million of foreign currency impact. The one-time costs to achieve the inventory-reduction totaled $47 million. These one-time costs are excluded from the Company’s adjusted results.

 

“Ashland’s financial results in the fourth quarter demonstrate the strength of our specialty materials portfolio and the importance of the actions we are taking internally,” said Guillermo Novo, chairman and chief executive officer, Ashland. “Our priorities are the health and safety of our employees and the continued supply of products to customers

 

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in the critical industries we serve. Our consumer business units performed particularly well as we experienced continued strong demand by our customers in Life Sciences and Personal Care and Household. Furthermore, our industrial business units realized substantial sequential improvement as global industrial demand continued to recover throughout the quarter.”

 

“I am pleased with the progress our team has made driving improvements to our cost structure and balance sheet,” continued Novo. “The combined benefit of selling, administrative and research and development cost reductions, plus improved product mix and lower raw-material costs in Consumer and Industrial Specialties again yielded year-over-year adjusted EBITDA growth during the quarter. In addition, we exceeded our original target for reduced inventory levels, which contributed to improved cash flow generation. I am confident that our continued internal actions will position us well for the upcoming fiscal year and beyond. I look forward to sharing additional thoughts on our plans and the progress we have made during the 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 and adjusted EBITDA are reconciled to operating income in Table 4. Free cash flow and adjusted operating income are reconciled in Table 6 and adjusted income from continuing operations, adjusted diluted earnings per share and adjusted diluted earnings per share excluding intangible amortization expense are reconciled in Table 7 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.

 

Consumer Specialties

 

Sales were $344 million, up four percent from the prior-year quarter. The Life Sciences and Personal Care & Household business units performed well with particular strength demonstrated by pharmaceutical excipients, biofunctional ingredients and additives for hand sanitizers. Importantly, our nutraceuticals business also returned to growth.

 

Operating income was $39 million, compared to $53 million in the prior-year quarter. Adjusted EBITDA was $97 million, up 10% from the prior-year quarter, reflecting higher sales, favorable price/mix and lower selling, administrative, research and development costs.

 

Industrial Specialties

 

Sales were $240 million, down three percent from the prior-year quarter, due primarily to lower industrial demand across the globe reflecting the impact of the COVID-19 pandemic. Sales grew sequentially by 17% compared to the June quarter as global industrial demand continued to recover.

 

Operating income was $21 million, compared to $37 million in the prior-year quarter. Adjusted EBITDA was $64 million, up three percent from the prior-year quarter, as lower volume was more than offset by favorable price/mix and lower operating costs.

 

 

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Intermediates & Solvents

 

Sales were $28 million, down 33% from the prior-year quarter, due primarily to lower merchant and captive volumes.

 

Operating loss was $3 million, down from operating income of $9 million in the prior-year quarter. Adjusted EBITDA was $6 million, down from $13 million in the prior-year quarter, primarily reflecting lower merchant and captive volumes.

 

Unallocated & Other

 

Unallocated and Other expense was $42 million, compared to $14 million in the prior-year quarter, primarily due to higher restructuring-related expenses. Adjusted Unallocated and Other expense was $13 million, compared to $14 million in the prior-year quarter.

 

Conference Call Webcast

Ashland will host a live webcast of its fourth-quarter conference call with securities analysts at 9:00 a.m. ET Wednesday, November 11, 2020. 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 7 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.

 

 

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Tax-specific key items, which are set forth on Table 7 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.

 

Adjusted diluted earnings per share, excluding intangibles amortization expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on earnings per share, in addition to key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.

 

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 4,500 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.  

 

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. Ashland may from time to time make forward-looking statements in its annual reports, quarterly reports and other filings with the SEC, news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance, financial condition, and expected effects of the COVID-19 pandemic on Ashland’s business, as well as the economy and other future events or circumstances. These statements include but may not be limited to Ashland’s expectations regarding its ability to drive sales and earnings growth and realize further cost reductions.

 

 

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Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the impact of acquisitions and/or divestitures Ashland has made or may make (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); severe weather, natural disasters, public-health crises (including the current COVID-19 pandemic), cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); the effects of the COVID-19 pandemic on the geographies in which we operate, the end markets we serve and on our supply chain and customers, and without limitation, risks and uncertainties affecting Ashland that are described in Ashland’s most recent Form 10-K (including Item 1A Risk Factors) filed with the SEC, which is available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at http://www.sec.gov. Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements. The extent and duration of the COVID-19 pandemic on our business and operations is uncertain. Factors that will influence the impact on our business and operations include the duration and extent of the pandemic, the extent of imposed or recommended containment and mitigation measures, and the general economic consequences of the pandemic. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this news release whether as a result of new information, future events or otherwise.

 

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:

 

 

 

 

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RECONCILIATION OF CERTAIN NON-GAAP DATA

(In millions except per share data - preliminary and unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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RECONCILIATION OF CERTAIN NON-GAAP DATA

(In millions except per share data - preliminary and unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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RECONCILIATION OF CERTAIN NON-GAAP DATA

(In millions - preliminary and unaudited)