Ashland Inc. · NYSE:ASH
Ashland — Q2 2020 Earnings Presentation
43 slides from Ashland's earnings presentation, May 6, 2020
Slide 1: Earnings Conference Call: Second-Quarter Fiscal 2020
Earnings Conference Call: Second-Quarter Fiscal 2020 May 6, 2020 – 10:00am Eastern Time / efficacy usability allure integrity profitability
Slide 2: Forward-Looking Statements
Forward-Looking Statements This 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
Slide 3: Agenda
Agenda o Q2 Performance Summary and COVID-19 Impact o Q2 Financial Results o New Business Units o Priorities and Outlook o Closing Comments o Thank you and Q&A 3
Slide 4: Q2 Performance Summary
Q2 Performance Summary «<f Ashland always solving
Slide 5: Our Priorities in Current Environment
Ashland Global Holdings Inc. Our Priorities in Current Environment priority # 1 address the impact of COVID-19 o health and safety of our employees o continued supply to our customers and the critical industries we serve o position Ashland for success across stressed scenarios o prepare for reopenin
Slide 6: Q2 COVID-19 Impact & Actions
Ashland Global Holdings Inc. Q2 COVID-19 Impact & Actions limited impact on demand from ASH considered an essential COVID-19 pandemic supplier by many global o more defensive portfolio agencies o expect Q3 demand reduction in several industrial businesses all manufacturing sites operating rapid enga
Slide 7: Q2 Financial Results
Q2 Financial Results «<f Ashland always solving
Slide 8: Fiscal-Second Quarter Adjusted Results
Ashland Global Holdings Inc. Fiscal-Second Quarter Adjusted Results1 ($US in millions, except percentages) Q2 FY20 Q2 FY19 Change Sales $610 $667 (9) % Gross profit margin 33.0 % 32.5 % +50 bps SG&A / R&D costs / Intangible amortization $127 $136 (7) % EBITDA $142 $142 - EBITDA margin 23.3 % 21.3 %
Slide 9: Consumer Specialties Adjusted Results Summary
Consumer Specialties Adjusted Results Summary1 ($US in millions, except percentages) Q2 FY20 Q2 FY19 Change Sales $343 $379 (9) % Gross profit $128 $130 (2) % Gross profit margin 37.3 % 34.3 % +300 bps Operating income $57 $58 (2) % Photo EBITDA $91 $92 (1) % EBITDA margin 26.5 % 24.3 % +220 bps o s
Slide 10: Industrial Specialties Adjusted Results Summary
Industrial Specialties Adjusted Results Summary1 ($US in millions, except percentages) Q2 FY20 Q2 FY19 Change Sales $240 $258 (7) % Gross profit $69 $75 (8) % Gross profit margin 28.8 % 29.1 % (30) bps Operating income $29 $35 (17) % Photo EBITDA $53 $59 (10) % EBITDA margin 22.1 % 22.9 % (80) bps o
Slide 11: Intermediates & Solvents Adjusted Results Summary
Intermediates & Solvents (I&S) Adjusted Results Summary1 ($US in millions, except percentages) Q2 FY20 Q2 FY19 Change Sales $37 $44 (16) % Gross profit $4 $12 (67) % Gross profit margin 10.8 % 27.3 % (1,650) bps Operating income $2 $9 (78) % Photo EBITDA $5 $12 (58) % EBITDA margin 13.5 % 27.3 % (1,
Slide 12: New Business Units
New Business Units «<f Ashland always solving
Slide 13: Our Portfolio
Ashland Global Holdings Inc. Our Portfolio Sales1 Adjusted EBITDA1 I&S, 6% I&S, 3% Industrial Industrial Specialties, Consumer Specialties, Consumer 39% Specialties, 40% Specialties, 54% 58% o Strong defensive and semi-defensive portfolio o four core end markets (Pharma, Personal Care, Architectural
Slide 14: Profile of our Business Portfolio
Ashland Global Holdings Inc. Profile of our Business Portfolio Defensive GDP/Economic-driven architectural coatings pharmaceutical (seasonal) food & nutrition building and construction transportation personal care energy performance specialties household I&S pressure sensitive flexible adhesives pac
Slide 15: Consumer Specialties
Ashland Global Holdings Inc. Consumer Specialties Life Sciences Personal Care & Household $200 35% $200 40% Adjusted EBITDA Margin Adjusted EBITDA Margin Sales (USD millions) Sales (USD millions) $150 $150 35% 28% 30% 30% $100 $100 30% 25% 25% 24% 24% 25% 25% 24% 24% $50 22% $50 23% 25% 23% $- 20% $
Slide 16: Industrial Specialties
Ashland Global Holdings Inc. Industrial Specialties Specialty Additives Performance Adhesives $200 30% $100 30% 27% Adjusted EBITDA Margin Adjusted EBITDA Margin Sales (USD millions) Sales (USD millions) $150 24% 25% 24% 25% 23% 23% 23% 22% 21% 21% 19% $100 20% $50 20% 17% 16% $50 15% 15% $- 10% $-
Slide 17: Intermediates & Solvents
Ashland Global Holdings Inc. Intermediates & Solvents Intermediates & Solvents Butanediol (BDO) production driven by security of supply $50 31% and lower cost 29% captive sales transferred at market price Adjusted EBITDA Margin 28% o 30% volume ~40% captive Sales (USD millions) o merchant business h
Slide 18: New Business Model Take-Aways
Ashland Global Holdings Inc. New Business Model Take-Aways o leadership position in core businesses with global scale and infrastructure o clear business-unit ownership and accountability • businesses restructured and improving cost structure • strategy updated • moving to execute o strong and broad
Slide 19: Priorities and Outlook
Priorities and Outlook «<f Ashland always solving
Slide 20: COVID-19 Potential Scenarios
Ashland Global Holdings Inc. COVID-19 Potential Scenarios Outcome Uncertainty level Containment of COVID-19 Spread Contained COVID-19 Spread Outcome Uncertainty level Defensive Market-Facing Portfolio COVID-19 Spread Contained but recurs in the fall Failure to Contain COVID-19 Spread Manufacturing &
Slide 21: COVID-19 Scenario Planning
Ashland Global Holdings Inc. COVID-19 Scenario Planning key take-aways o largely defensive portfolio o supply chain presents greatest risk o self-help actions improving our performance o high level of uncertainty, difficult to model downside scenarios shifted focus to stress testing o ensure corpora
Slide 22: Stress Test
Ashland Global Holdings Inc. Stress Test in the event of a prolonged economic downturn or failure to contain the spread of COVID-19 o our overall portfolio is defensive, with significant differences by business unit • resilient though muted demand within Consumer Specialties • stressed demand within
Slide 23: Cost and Growth Actions
Ashland Global Holdings Inc. Cost and Growth Actions self-help initiatives proceeding as communicated expect to achieve over $40 million of incremental cost savings o achieve run-rate savings by end of fiscal 2020 o keep $40 million to improve cost position o retain optionality to redeploy additiona
Slide 24: Well Positioned for Uncertain Times
Ashland Global Holdings Inc. Well Positioned for Uncertain Times strong foundation for success o high-value technologies, leading market positions in critical industries and deep customer relationships o focused business units self-help actions o reducing working capital, capital spending and operat
Slide 25: Outlook
Ashland Global Holdings Inc. Outlook not providing guidance for Q3 or FY2020 forward-looking insights o more stable demand for defensive end markets o weaker demand, and more uncertainty, for much of Industrial Specialties o uncertainty of impact on seasonal end markets (Coatings and Construction) o
Slide 26: Closing Comments
Closing Comments «<f Ashland always solving
Slide 27: A Premier Specialty Materials Company
Ashland Global Holdings Inc. A Premier Specialty Materials Company o focused on high-quality markets and businesses with exciting profitable growth opportunities o franchise businesses have leadership positions • #1 or #2 • strong teams with deep industry expertise • excellent customer relationships
Slide 28: Thank you and Q&A
Thank you and Q&A of Ashland
Slide 29: Appendix A: Adjusted Results Summary and Balance Sheet
Appendix A: Adjusted Results Summary and Balance Sheet
Slide 30: Adjusted Results Summary
Ashland Global Holdings Inc. Adjusted Results Summary1 ($US in millions, except percentages and Q2 FY20 Q2 FY19 Change per share data) Sales $610 $667 (9) % Gross profit $201 $217 (7) % Gross profit margin 33.0 % 32.5 % +50 bps Photo SG&A / R&D costs / Intangible amort. $127 $136 (7) % Operating inc
Slide 31: Business Unit Consolidation
Ashland Global Holdings Inc. Business Unit Consolidation ($US in millions, except Consumer Industrial Interco Unallocated I&S Ashland percentages) Specialties Specialties Eliminations and Other Sales $343 $240 $37 ($10) - $610 Gross profit $128 $69 $4 - - $201 Gross profit margin 37.3 % 28.8 % 10.8
Slide 32: Liquidity and Net Debt
Ashland Global Holdings Inc. Liquidity and Net Debt Moody’s 3/31/20 ($US in millions) Expiration Interest Rate S&P Rating Rating Balance Cash $353 Revolver and A/R facility availability 339 Cash, A/R and revolver availability $692 Photo Debt 2.00% Notes (EUR) Jan. 2028 2.000% Ba1 BB+ $551 4.750% Not
Slide 33: Appendix B: Non-GAAP Reconciliation
Appendix B: Non-GAAP Reconciliation1 1 Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP reported financial measures or a reconciliation of forward-looking non-GAAP financial mea
Slide 34: Reconciliation of Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended March 31, 2020 ($ millions, except percent ages) Sales1 Q2 20 Q1 20 Q4 19 Q3 19 Tot al Life Sciences 184 155 176 190 705 Personal Care & Household 159 137 157 158 611 Consumer Specialt ies
Slide 35: Segment Components of Key Items for Applicable Income Statement Captions
Ashland Global Holdings Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions for 3 Months Ended March 31, 2020 ($ millions) Life Personal Care Consumer Specialty Performance Industrial Intermediates Unallocated Sciences and Household Specialties
Slide 36: Segment Components of Key Items for Applicable Income Statement Captions
Ashland Global Holdings Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions for 3 Months Ended March 31, 2019 ($ millions) Life Personal Care Consumer Specialty Performance Industrial Intermediates Unallocated Sciences and Household Specialties
Slide 37: Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income for 3 Months Ended March 31, 2020 and 2019 ($ millions) Three months ended March 31 1 Free cash flows 2020 2019 Total cash flow s used by operating activ ities fr
Slide 38: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended March 31, 2020 and 2019 ($ millions) Three months ended March 31 Adjusted EBI TDA - Ashland Global Holdings I nc. 2020 2019 Net income (loss) $ (582) $ 76 I ncome tax expense (benefit) (10) 1 Net intere
Slide 39: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Consumer Specialties Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended March 31, 2020 and 2019 ($ millions) Three months ended March 31 2020 2019 Life Sciences Operating income $ 36 $ 33 Add: Depreciation and amortization 15 15 Operating key items 1 - Adjusted EBI TDA $ 52 $ 48 As
Slide 40: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Industrial Specialties, Intermediates and Solvents Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended March 31, 2020 and 2019 Three months ended ($ millions) March 31 2020 2019 Specialty Additives Operating income $ (161) $ (2) Add: 1 Depreciation and amortization 20 20 Operating k
Slide 41: Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations for 3 Months Ended March 31, 2020 and 2019 Three months ended ($ millions) March 31 2020 2019 Income (loss) from continuing operations (as reported) $ (575) $ 45 Ke
Slide 42: Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations for 3 Months Ended March 31, 2020 and 2019 Three months ended ($ millions) March 31 2020 2019 Diluted EPS from continuing operations (as reported) $ (9.48) $ 0
Slide 43: Registered trademark notice
® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries