Ashland Inc. · NYSE:ASH
Ashland — Q3 2022 Earnings Presentation
43 slides from Ashland's earnings presentation, Jul 27, 2022
Slide 1: Earnings conference call third-quarter fiscal 2022
earnings conference call — third-quarter fiscal 2022 July 27, 2022 I 9:00 am ET
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 Q3 performance summary o Q3 financial results o advancing our strategy o outlook o closing comments o Q&A 3
Slide 4: Q3 performance summary
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Slide 5: Strong, resilient performance in a world of accelerating change
strong, resilient performance — in a world of accelerating change intentional disciplined agile resilient sales, profit and margins sustainable exceeding pre-pandemic levels adaptive focused approachable strong cost recovery in a high inflation environment specialty profitable growth modern nimble i
Slide 6: Outstanding performance
1 outstanding performance — sales adjusted EBITDA adjusted EBITDA % adjusted EPS2 +19 % +35 % +320 bps +93 % $644 MM $174 MM 27.0 % $1.89 strong price leadership position broad-based sales strong returns to realization and mix in high-value end growth shareholders improvement markets 1 Comparisons v
Slide 7: Growth across all business units
growth across all business units — strong sales1 growth with expanded Adjusted EBITDA margins 49% 45% 29% 29% 19% 27% 27% 18% 17% 15% life personal specialty intermediates 2 Ashland life personal specialty intermediates 2 Ashland sciences care additives sciences care additives 1 Comparisons versus p
Slide 8: Q3 financial results
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Slide 9: Fiscal third-quarter adjusted results
fiscal-third quarter adjusted results1 — excellent operating performance Ashland ($US in millions, except percentages) Q3 FY22 Q3 FY21 change sales $644 $543 +19 % gross profit margin 37.3 % 32.2 % +510 bps SG&A / R&D costs / intangible amortization $127 $110 +15 % operating income $114 $66 +73 % EB
Slide 10: Life sciences
life sciences — adjusted results summary1 highlights ($US in millions, except percentages) Q3 FY22 Q3 FY21 change sales $228 $193 +18 % o strong pharma demand o favorable product mix gross profit $83 $66 +26 % o disciplined cost recovery gross profit margin 36.4 % 34.2 % +220 bps through pricing ope
Slide 11: Personal care
personal care — adjusted results summary1 highlights ($US in millions, except percentages) Q3 FY22 Q3 FY21 change sales $172 $147 +17 % o strong demand across all end markets gross profit $65 $55 +18 % o acquisition performing gross profit margin 37.8 % 37.4 % +40 bps above expectations operating in
Slide 12: Specialty additives
specialty additives — adjusted results summary1 highlights ($US in millions, except percentages) Q3 FY22 Q3 FY21 change sales $194 $169 +15 % o strong end-market demand o PRO coatings demand grew gross profit $60 $40 +50 % faster than DIY gross profit margin 30.9 % 23.7 % +720 bps o supply-chain cha
Slide 13: Intermediates
intermediates — adjusted results summary1 highlights ($US in millions, except percentages) Q3 FY22 Q3 FY21 change sales $73 $49 +49 % o strong pricing across all product lines gross profit $32 $14 +129 % o captive (internal) sales gross profit margin 43.8 % 28.6 % +1,520 bps recorded at market prici
Slide 14: Balance sheet
balance sheet — strong financial position with increased flexibility completed share repurchase and new authorization o $650 million of share repurchases (~6.75 million shares) since August 2021 o approved new evergreen $500 million share repurchase authorization strong balance sheet1 o cash and liq
Slide 15: Advancing our strategy
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Slide 16: Progress
progress — operating resilience strategic focus innovation & growth capital allocation disciplined pricing in an margin expansion and free cash strong growth in new product expanding cellulosic capacity inflationary environment flow conversion introductions production capabilities beyond improved mi
Slide 17: Priorities
priorities — profitable growth margin expansion enhanced FCF - rebalanced our innovation portfolio - accelerate innovation growth - prioritize organic growth CAPEX - consumer-market focus - value pricing - improved working capital efficiency - intensifying ESG initiatives - mix improvement - strateg
Slide 18: ESG update
ESG update — environment, social, governance (ESG) Report will publish in Q4 achieved FSC Certification for cellulose-based materials Science Based Targets (SBTi) • identified and strengthened Scope 1, 2, and 3 emissions reporting process in baseline year (2020) • currently setting targets enterpris
Slide 19: Increased innovation speed & impact
increased innovation speed & impact — # of new products launched o record number of new product introductions o 99% of FY22 launches focused on growth FY20 FY21 FY22 o 88% of the launches FY22 year-to-date are highly sustainable Q1 Q2 Q3 Q4 o disciplined innovation process (project and portfolio man
Slide 20: Conscious to cutting-edge innovations
conscious to cutting-edge innovations — recent industry awards strategic innovation portfolio shift to higher impact new technologies with strong ESG value Ringier Technology innovation awards – China best functional ingredient, in-cosmetics Korea aquaflow™ ECO-300 rheology modifier antaron™ soja gl
Slide 21: Outlook
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Slide 22: Recognized risk but unpredictable impact
recognized risk but unpredictable impact — recognized risks potential impact o energy rationing in Europe o supply risk across value chain o globalization on impacts o COVID lockdowns o reduced demand o recession / stagflation o cost inflation when, o supply-chain reliability where, and how much? 22
Slide 23: Unique portfolio with resilient growth drivers
unique portfolio with resilient growth drivers — resilient end markets with incremental profitable growth lower exposure to petrochemical- demonstrated demand stability opportunities (independent of based volatility (inflation drivers) (even in recessions) recessions) sales1 (US$ million, constant c
Slide 24: European exposure to energy rationing
European exposure to energy rationing — Ashland’s presence potential risks o annual sales into Europe represent o energy rationing in Germany / Europe could impact approximately 30% of total Ashland sales regional production for Ashland, suppliers and customers (~$700 million) o product shortages in
Slide 25: Outlook
outlook — full-year guidance recently increased forward looking insights risks sales o impact of Russia / Ukraine war in European o robust demand energy availability $2.35 – $2.40 billion • strong order book • low inventory levels o rising global energy costs adjusted EBITDA o pricing to address cos
Slide 26: Closing comments
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Slide 27: Ashland
Ashland — focused additives and specialty ingredients company leadership positions in high-quality markets and with ○ flexible, agile exciting profitable growth opportunities strong technology, commercial and ○ consistent execution operations capabilities global infrastructure ○ solid growth compell
Slide 28: Thank you and Q&A
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Slide 29: Appendix A: adjusted results summary and balance sheet
appendix A: adjusted results summary and balance sheet 29
Slide 30: Adjusted results summary
adjusted results summary1 — ($US in millions, except percentages and per share data) Q3 FY22 Q3 FY21 change sales $644 $543 +19 % gross profit $240 $175 +37 % gross profit margin 37.3 % 32.2 % +510 bps SG&A / R&D costs / intangible amort. $127 $110 +15 % operating income $114 $66 +73 % depreciation
Slide 31: Q3 business unit consolidation
Q3 business unit consolidation1 — intercompany unallocated ($US in millions, except percentages) life sciences personal care specialty additives Intermediates Ashland eliminations2 and other3 sales $228 $172 $194 $73 ($23) - $644 gross profit $83 $65 $60 $32 - - $240 gross profit margin 36.4 % 37.8
Slide 32: Liquidity and net debt
liquidity and net debt — ($US in millions) expiration interest rate Moody’s rating S&P rating 6/30/22 balance cash $629 revolver and A/R facilities availability 686 cash, A/R and revolver availability1 $1,315 US A/R sales program1 $58 debt 2.00% notes (EUR) Jan. 2028 2.000% Ba1 BB+ $522 3.375% notes
Slide 33: Appendix B: non-GAAP reconciliation
appendix B: non-GAAP reconciliation1 1 Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP reported financial measures or a reconciliation of forward-looking non-GAAP financial mea
Slide 34: Reconciliation of Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended June 30, 2022 — ($ millions, except percentages) Sales1 Q3 22 Q2 22 Q1 22 Q4 21 Total Q3 21 Life Sciences $ 228 $ 204 $ 170 $ 189 $ 791 $ 193 Personal Care 172 172 147 183 674 147 Specialty
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 June 30, 2022 ($ millions) Perso na l Three Months Ended June 30, 2022 Sp ec ia lty Intermed ia te Una llo c a ted Life Sc ienc es C a re Ad d itiv
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 June 30, 2021 ($ millions) Three Months Ended June 30, 2021 Perso na l Sp ec ia lty Intermed ia te Una llo c a ted Life Sc ienc es C a re Ad d itiv
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 the 3 and 9 Months Ended June 30, 2022 ($ millions) Free ca sh flows To ta l c a sh flo w s p ro vid ed b y o p era ting a c tivities fro m Three mo nths en
Slide 38: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended June 30, 2022 — ($ millions) Three mo nths end ed June 30 Ad justed EBITDA - Ashla nd Glo b a l Ho ld ing s Inc . 2022 2021 Net inc o me $ 36 $ 80 Inc o me ta x exp ense (b enefit) 1 (26) Net interest a
Slide 39: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended June 30, 2022 — ($ millions) Three months June 30 2022 2021 Ad justed EBITDA - Life Sc ienc es Op era ting inc o me $ 51 $ 37 Ad d : Dep rec ia tio n a nd a mo rtiza tio n 16 16 Op era ting key items (s
Slide 40: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Specialties Additives and Intermediates Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended June 30, 2022 — ($ millions) Three months June 30 2022 2021 Ad justed EBITDA - Sp ec ia lty Ad d itives Op era ting inc o me $ 35 $ 15 Ad d : Dep rec ia tio n a nd a mo rtiza tio n 21 21 Op e
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 the 3 and 9 Months Ended June 30, 2022 and 2021 ($ millions) Three mo nths end ed 2022 June 30 2021 Nine mo nths end ed 2022 June 30 2021 Income from continui
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 the 3 and 9 Months Ended June 30, 2022 and 2021 Three mo nths end ed 2022 June 30 2021 Nine mo nths end ed 2022 June 30 2021 Diluted EPS from continuing
Slide 43: Ashland
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